USD/CAD bearish weekly signal in the making post-NFP

• USD/CAD threatening to close the week with a weekly bearish signal.
• USD/CAD sells off post-NFP.

The USD/CAD is currently trading at about 1.2846 down 0.40% on the day. Earlier on Friday, the NFP numbers came well above expectation at 313k vs 200k. However, the market focus was on the average hourly earnings which came lower than expected at 2.6% vs 2.8% y/y and 0.1% vs 0.2% m/m. The unemployment rate was neutral at 4.1% vs. 4.0% expected. The labor force participation rate was positive as it increased to 63.0% vs. 62.8 expected; last month it was at 62.7%. All in all, the set of employment data is constructive except for the average hourly earnings.  

The US Dollar had an initial spike but soon the sentiment shifted to see the US Dollar sold across the board against most major currencies. 

Bank of Canada Poloz is scheduled to speak next Tuesday at 14.30 GMT. No major macro news for Canada is expected next week. 

According to National Bank of Canada, the outlook for employment stays positive. 

“Despite mounting inflation pressures, the Bank of Canada has made it clear it is in no rush to move on rates because of uncertainties related to trade and the economy’s sensitivity to earlier rate hikes. The outlook for employment remains positive with corporations reporting strong profits and labor shortages, although the pace of job growth is likely to be restrained until at least a revamped NAFTA is signed by policymakers.”

More info on Canada employment here.

USD/CAD weekly chart

The Loonie has tested the 1.3000 psychological level, the 200-period simple moving average on the weekly chart and the 50% Fibonacci retracement level. If the weekly candle closes the way it looks at the time of writing, the bears have a weekly shooting star pattern at key resistance. USD bulls will likely need a stellar CPI next week to overcome this potentially bearish configuration. To the upside, key resistance is then the 1.3000 figure level, followed by the 1.3165 level which is the 61.8% Fibonacci retracement. To the downside, support is seen at 1.2700 which is the 38.0% Fibonacci retracement followed by 1.2470 which is the 23.6 Fibonacci retracement.