- The Canadian Dollar has declined for the second day in a row as the US Dollar strengthens.
- Positive US employment data drives up US Treasury yields and strengthens the US Dollar.
- Following lackluster labor figures, the Canadian Dollar finds relief as robust Ivey PMI data alleviates downward pressure.
The value of the Canadian Dollar (CAD) increased during the trading session that took place in the United States on Friday. A combination of factors, including a successful employment report from the United States and unsatisfactory labor figures from Canada, led to a significant decline in the value of the Canadian dollar.
The Canadian dollar, on the other hand, was able to recoup some of the losses it had sustained as the effects of these data began to fade.
A positive reaction was seen in the yields on US Treasury securities and the value of the US dollar as a result of the nonfarm payrolls report for March in the United States, which exceeded expectations. The data were examined further, and it became clear that the annual increase in wages had dropped to its lowest level in quite some time.
This was the lowest level it had been in years. In spite of the fact that Federal Reserve Governor Michelle Bowman has expressed a more hawkish stance, there is still optimism regarding the possibility of rate cuts from the Federal Reserve.
The number of people working in Canada in March needed to meet the expectations that were set for them. The Canadian Dollar, on the other hand, has been given a boost due to the significant improvement in the Ivey PMI for March, which has helped to counteract the adverse reactions.
USD/CAD Pair Continues to Fall as the US NFP Exceeds Forecasts
- The Canadian Dollar has regained some of the lost territory following the publication of the US Nonfarm Payrolls Report. However, it continues to show negative performance on both the daily and weekly charts.
- The number of jobs added in the US in March rose to 303K, a significant increase from the 270K added in February. This exceeded the market experts’ forecast of 200K.
- Hourly earnings have seen a slight uptick, with a monthly increase of 0.3% and a year-on-year growth of 4.1%. This represents a slight decrease from the previous month’s figures of 0.2% and 4.3%, respectively.
- The Canadian Ivey Purchasing Managers’ Index has seen a significant improvement, reaching a reading of 57.7. This marks its highest level in the past year, surpassing the previous reading of 53.9 in February.
- Earlier, investors were disappointed by the Canadian employment data, which showed a decline of 2.2K in March following a 40.7K increase in February. The market had anticipated a rise of 25,000.
- Fed Governor Bowman cautions that should inflationary pressures persist, an extra increase in interest rates will be necessary.
- During a recent statement, Fed Powell emphasized the importance of allowing additional time for the central bank to make decisions regarding rate cuts. In contrast, Fed Kashkari expressed caution by suggesting that there may not be any rate cuts for the remainder of the year. As a result, the USD experienced an increase in value.
The USD/CAD Pair Is Unable to Overcome the Resistance at the 1.3640 Level
Strong employment numbers in the United States have caused the USD/CAD currency pair to get closer and closer to a significant resistance level above 1.3620. As of right now, this level has not been broken, and the upward pressure exerted on the pair has been alleviated by encouraging data provided by the Canadian Purchasing Managers’ Index.
The overall forecast indicates that the United States Dollar will continue to move within an upward channel, with the price movement remaining consistently limited below the resistance of the trendline, which is located at 1.3640 percent.
A look into the future reveals that the upcoming goals are 2.3710 and 1.3770 goals. 1.3845 is the target that has been set for the channel. Between 1.3560 and 1.3485 are the levels that provide support.