USD/CAD Retreating From the 200 SMA, After the Decline in Canadian Unemployment Rate - Forex News by FX Leaders
Jobs reversed in June in Canada

USD/CAD Retreating From the 200 SMA, After the Decline in Canadian Unemployment Rate

Posted Friday, July 9, 2021 by
Skerdian Meta • 2 min read

The USD/CAD was on a strong bearish trend from March last year until the end of May this year. The price declined more than 25 cents, as the USD/CAD fell to 1.20. But, that seems to have been the target for sellers, because after reaching that big round level, the USD/CAD reversed higher and has been bullish since.

The 20 SMA has turned into support  for USD/CAD

Moving averages were broken on the daily chart, and the 20 SMA (gray) turned into support. But, the 200 SMA (purple) seems to be holding as support now, especially after the decent decline in the Canadian employment rate today. Crude oil is also bullish today, which is helping the CAD. Although, CAD gains have been much smaller compared to the gains in crude oil, so I expect the bullish trend in the USD/CAD to resume soon.

USD/CAD Live Chart

USD/CAD

Highlights of Canada’s June 2021 employment report

Canada June employment

 

  • June employment 230.7K vs +195K expected
  • May employment was -68K
  • Full time -33.2K versus -13.8K last month
  • Part-time 263.9K versus -54.2K last month
  • Unemployment rate 7.8% versus 8.2% last month
  • Participation rate 65.2% versus 64.6% prior
  • Hourly wage rate for permanent employees -1.44% y/y prior
The decline in the unemployment rate is great, although the full-time job losses were a disappointment. Nonetheless, they held up well in May after the decline last month, so perhaps that’s not a big surprise. The reopening of the retail  sector is more of a factor for the increase in part-time jobs in any case.
What stands out for me is the climb in participation by 0.6%, combined with a 0.4% decline in unemployment. That’s a full point swing altogether, and it highlights a rapidly recovering labor force. Lockdowns are still in effect in July in much of Canada, but vaccination has been extremely fast and is nearing 80% with one jab. So the opening will be swift in July and August, and Macklem is likely to be optimistic next Wednesday, especially given that the latest GDP data was strong.
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