USD/CAD Traded Mostly Flat in the Post-Jobs Data Dollar Strengthening

Tips 

• Due to the focus on Russia-Ukraine, the dollar strengthened while the euro fell.

• After solid US job data, a significant portion of the yield curve reversed.

• Prices of gold and silver fell as yields and the dollar soared.

• Oil prices oscillated as the EIA met to discuss the deployment of additional oil reserves.

The dollar has remained relatively stable against the Loonie, as good US economic data has slowed the expected downward pressure in the near term. Yields on benchmark bonds increased by several basis points. The yield curve's 2s-10s segment reversed following strong employment figures, a crucial indicator of recession in the future years. Gold prices fell as yields increased and the dollar strengthened. Oil prices fell sharply in tumultuous trading as members of the International Energy Agency (IEA) convened to examine the possibility of releasing additional oil reserves. Over the following six months, the US aims to release 180 million barrels, or one million barrels every day. This is the largest release from the US Strategic Petroleum Reserves in history (SPR). Regardless of the discharge, oil supplies will continue to be a problem in the coming months.

On Friday morning, a slew of vital economic data were released. Nonfarm payrolls, a proxy for the total number of workers in the United States, increased by 431,000 in March. Despite rising inflation and the risk of an economic slump, the reading was somewhat below the projected 490,000 figure. Unemployment fell by 0.2 percent to 3.6 percent, falling short of estimates of 3.7 percent. Hourly wages increased by 0.4 percent on average, in line with predictions. The reading is used to closely monitor inflation. Today's economic numbers were unsurprising, indicating that the Fed will most likely hike rates at each of the remaining six FOMC meetings this year.

Technical Evaluation

The USD/CAD trades slightly higher as the dollar strengthens on the back of solid economic data indicating an improving labor market. Despite this, the currency pair is under pressure to the downside and will likely continue to trade lower. Although the pair has broken through the crucial 1.25 barrier, the Loonie remains optimistic in the medium term due to the ongoing oil supply constraint and Ukraine-Russia tensions. If the pair breaks through 1.26, the downward trend becomes less assured. The horizontal trendline near the January lows of 1.246 provides support. Resistance is located near the ten-day moving average, which is now at 1.252. The short-term momentum goes positive as a result of the fast stochastic generating a purchase signal.

Although the MACD line generated a crossover sell signal, the medium-term momentum is negative but favorable. When the MACD line (the 12-day moving average minus the 26-day moving average) passes the MACD signal line, this scenario occurs (the 9-day moving average of the MACD line).