Canadian dollar pauses after excellent week

The Canadian dollar is down slightly at the start of the week. Currently, USD/CAD is trading at 1.2809, up 0.19% on the day. It was another rough week for the US dollar, as the Canadian dollar pushed 1.5% higher.

Job numbers take opposite directions in US, Canada

Analysts had expected that employment numbers would sag in November,  but Canadian data was unexpectedly strong. Employment Change slowed to 62.1 thousand, down from 83.6 thousand. However, this was much stronger than the estimate of 22.0 thousand. The unemployment rate fell for a sixth straight month, dropping from 9.0% to 8.5%. It was a different story south of the border, as US nonfarm payrolls slowed to 245 thousand, down sharply from 638 thousand beforehand. This figure was well short of the consensus of 480 thousand. Wage growth rose to 0.3%, up from 0.1%, while the unemployment rate dropped from 6.9% to 6.7%.

The week started with Canada’s Ivey PMI for November, which came in at 52.7 points. Although this reading was weaker than the previous release of 54.5, the index has had a strong H2 in 2020, as readings have remained in expansionary territory since June. Canada’s economy is headed in the right direction, although the pace of recovery has been modest.

The next significant event for USD/CAD is the Bank of Canada rate decision on Wednesday. In the current global environment of ultra-low interest rates, it’s a safe bet that bank members will not be making any changes to the Overnight Rate, which has been pegged at 0.25% since March. This means that the markets will be focussing on the rate statement, which will provide details as to how the BoC’s view of the strength of the economy.

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USD/CAD Technical

• USD/CAD faces resistance at 1.2848, followed by resistance at 1.2912
• There is support at 1.2747. Below, there is support at 1.2710

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