Chart of The Day USDCAD
USDCAD Potential Reversal Zone & Probable Price Path
USD: The U.S. employment data was weaker than expected. The market is waiting to see whether Congress can reach a consensus on a new round of fiscal measures as soon as possible. The U.S. dollar index hovered at a low level last Friday, falling by as much as 0.3% to 90.5, hitting a new low since April 2018. It reported 90.7, down 1.2% weekly. U.S. 10-year Treasury bill yield rose by nearly 6 basis points to close at 0.966% The number of newly created non-agricultural jobs in the United States in November fell from 610,000 to 245,000, the slowest increase since May and lower than the market’s expectations of 460,000. The unemployment rate fell from 6.9% to 6.7%, in line with expectations. The participation rate fell from 61.7% to 61.5%, slightly worse than market expectations. In addition, factory orders in October increased by 1% month-on-month, which was higher than market expectations for a 0.8% increase
US President-elect Biden pointed out that the latest employment data reflects that Congress should pass financial relief measures as soon as possible. The Speaker of the House of Representatives Pelosi said that the two-party negotiations are moving towards reaching an agreement. Some Republican senators believe that the leader McConnell and the current President Trump will support more than $900 billion in aid programs. Bloomberg reported that some Republican lawmakers are still dissatisfied with the part of the plan that suggests assistance to state and local governments.
CAD: The rebound in oil prices may support the performance of the Canadian dollar in the short term.Oil prices rose, and the Canadian dollar rose 0.6% to 1.278 against the US dollar last Friday, the highest since May 2018; the cumulative increase last week was 1.6%, which was the third consecutive week of increase. The Organization of the Petroleum Exporting Countries reached an agreement on easing production cuts, and the market expected the United States to reach an increased chance of reaching a fiscal stimulus plan. New York oil futures rose 1.4% to US$46.3 per barrel on Friday, a nine-month high. The unemployment rate in Canada fell back to 8.5% in November, which was lower than market expectations of 9%. The Bank of Canada will discuss interest rates on Wednesday, and the market expects interest rates to remain unchanged
From a technical and trading perspective, USDCAD continues its grind lower to the primary equality objective sited at 1.2715.ON the intraday H4 timeframe bears will be watching to see how price responds on a corrective swing to test offers at 1.2850 use bearish rejections from this are to deploy short exposure targeting a test of 1.2715, from here we may witness another phase of profit taking. Watch for momentum divergence to develop on the next leg lower , note we didn't see any meaningful divergence on the low printed at the end of last week which encourages the bearish continuation view for now.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!