Canadian Dollar Recovers on Strong Job Data as US Dollar Drops

Canadian dollar: On Friday, Canadian data revealed a larger-than-expected drop in the unemployment rate and net growth of 90K jobs. Despite the uncertainty produced by the COVID-19, the report revealed a very remarkable job creation, according to analysts at the National Bank of Canada.

After better-than-expected job numbers, the Canadian dollar rose sharply in the early US session. With European stocks and US futures leading the way, commodity currencies are generally solid, followed by the Sterling. The Yen, Swiss Franc, and Dollar, on the other hand, are weakening, but the Euro is not far distant. The question now is whether risk markets will close the week on a high note, triggering further dollar selling next week.

Canada In August, employment increased by 90.2k, much exceeding the 67.2k forecast. This is the third month in a row that the index has risen. In February 2020, employment is also within -0.8 percent of pre-pandemic levels. The majority of job growth was in full-time jobs, which increased by 69k. The unemployment rate fell to 7.1 percent, down from 7.5 percent, which was better than the forecast of 7.4 percent. It was also the lowest since February 2020.

In August, the US PPI for final demand increased by 0.7 percent mom, exceeding expectations of 0.6 percent mom. PPI increased 8.3 percent YoY in the 12 months ended in August, up from 7.8 percent, which was in line with predictions. Since the 12-month dates were originally determined in 2010, this is the highest increase. Final demand, excluding food, energy, and trade services, increased by 0.3 percent mum. PPI increased by 6.3 percent year on year, the highest increase since the measure was initially recorded in 2014.

Canadian Dollar: Job Rate Declines to 7.1%, USD/CAD Under Mid 1.2600

The USD/CAD pair fell to a daily low of 1.2585 as a result of the first reaction and was last spotted at 1.2592, down 0.55 percent on the day. The decrease in the USD/CAD from 1.2760 continues today, but it remains above the 1.2492 support level. First, the intraday bias stays neutral.

On the downside, a break of 1.2480 will lead to the crucial structural support level of 1.2421. A sustained break there should signal the end of the jagged ascent that began in 1.2005. Instead, a break above 1.2760 will lead to a retest of the 1.2947 high.

If buying activity rises, the range between 1.2707 and 1.2761 may be the first to try to dampen bullish pressures. Conquering it, on the other hand, might push the price towards the difficult resistance zone of 1.2880-1.2955. After breaking through this reinforced barrier, the pair could face the 1.3030 barriers, with another drive higher aiming for the 1.3112 and 1.3172 highs by mid-November 2020.