USD/CAD Corrects Near 1.3835 After Canadian Labour Data

In August, unemployment remained at 6.4%. However, the rate for core-aged men rose by 0.2 percentage points, offset by a 0.2-point decline among core-aged women, while youth unemployment was little changed at 12.9%. According to Statistics Canada, employment fell by 42,000, or 0.2%, and the employment rate declined by 0.1 percentage points to 60.8%.

The largest employment declines occurred in business, building and other support services (-2.8%), public administration (-0.7%), natural resources (-2.3%) and utilities (-3.5%). Manufacturing was the only sector to record a notable increase, at 1.2%. Average hourly wages rose 2.0% year over year, or C$0.71, to C$37.02, after growth of 2.8% in July.

During the morning session, the US Dollar Index advanced toward 99.10, extending Friday’s positive momentum after a strong labour-market report. BLS data showed that nonfarm payrolls increased by 162,000 in August after 21,000 in July, while private-sector payrolls rose by 127,000. The figures strengthened expectations that the Federal Reserve could tighten monetary policy at its September meeting.

Support and resistance levels

On the daily chart, the instrument is approaching the resistance line of a descending channel whose boundaries are around 1.3850–1.3700.

Technical indicators are preparing to reinforce a sell signal: the Alligator’s oscillation range is widening after moving into a new range, the fast EMAs remain below the signal line, and the Awesome Oscillator histogram is producing corrective bars in negative territory.

Support: 1.3790, 1.3690.

Resistance: 1.3870, 1.3970.

Trading scenarios

Short positions may be opened after the price falls and consolidates below 1.3790, with a target at 1.3690 and a stop-loss at 1.3860. Estimated time frame: seven days or more.

Long positions may be opened after the price rises and consolidates above 1.3870, with a target at 1.3970 and a stop-loss at 1.3790.

Main scenario

Alternative scenario