USDCAD Conflicting Clues

Last Friday we had unemployment figures from both Canada and the US. Below were the results.

USA - Average Hourly Earnings (YoY): 5.4%
USA - Nonfarm Payrolls: 49K
USA - Unemployment Rate: 6.3%
CAD - Employment Change: -212.8K
CAD - Unemployment Rate: 9.4%

Here you can see the US reported their unemployment rate at 6.3% signaling a nice improvement, following a not so nice NFP report with only 49k new jobs. On the other ide of this pair, Canada reported a much higher Unemployment figure at 9.4%. The initial reaction with USDCAD was bullish but then as the trading session progressed this pair continued getting weaker.

Some key drivers heading into this week include: Earnings, Stimulus, Core CPI (Wednesday) US Federal Budgetd (Wednesday) Fed Monetary Policy Report (Thursday) and perhaps some further CAD strength if Oil Continues it's bullish path towards $60. As we know, certainty surrounding additional stimulus supports a stronger equity market and thus drives the DXY lower.

On a technical basis, the pair is indicating some strange behavioral patterns such as the convergence seen here on the daily chart. RSI did manage to close below 50 heading into Friday's close. A close below 50 does indicate that we could be heading lower but if you take a closer look how the 50 level behaved with this pair, you'll many instances when that may have been a misleading clue.. Needless to say, holding below 50 is taken into minor consideration, but we should also monitor the next 2 major fib levels such as the 50% and 61.8% illustrated on the chart.

Key clues regarding the direction of this pair should include keeping a close tabs on the DXY SPX NDQ VIX and of course overall market sentiment.

Trading Recommendations
== keep bullish trading activities light with this pair considering we may still see some further bearish downside
== keep shorts limited as well considering there very well could be some upside towards 1.30

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Regards,
Michael Harding 😎 Chief Technical Strategist @ LEFTURN Inc.

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