USD/CAD Attempting to break Channel Resistance after Jobs data

by Admin

Awards 2013

US NFP for March fell from 236K in February to only 88K jobs added in March, missing the expectation of about 200K. The unemployment rate edged slightly lower from 7.7% to 7.6%.

Although the US data was poor, the Canadian jobs data was even worse. After adding 50.7K jobs in February, the Canadian economy shed 54.5K jobs in March, the worst reading since Feb. 2009.

The USD/CAD reacted immediately with a sharp rally. Let’s take a look at the chart.

USD/CAD 4H chart 4/5/2013 9:00AM EST

USDCAD

Consolidation channel: USD/CAD has been trading lower since hitting the 2013-high of 1.0340, forming a falling consolidation channel as seen in the 4H chart. The decline goes against a bull run from the 2013-low of 0.9814. It was breaking down below the rising trendline that went back to that 0.9814 low from January. Before the jobs reports, it found support from the 1.0100 handle.

Channel break? The market bought up USD/CAD sharply after the jobs reports. As we get into the 4/5 US session (the last of the week), the USD/CAD is testing this falling consolidation channel resistance around 1.02. If there is initial resistance, but the market can hold above 1.0160, bulls should still be in charge. However, a fall below 1.0150 or so would show bears still in charge despite this initial event risk reaction.

If the breakout extends above 1.0225 and the 200-4H-SMA, it could open up the bullish continuation scenario for the medium term (Q2), first with the 1.0340 high in sight.