- USD/CAD fell to a multi-year low as the dollar continued to weaken.
The pair fell in part due to higher crude oil prices.
They also fell on US non-farm payroll data and Canadian employment data.
USD/CAD fell to its lowest level since October 2018 as higher crude oil prices and employment numbers boosted interest in the Canadian dollar. The pair is also on its way to its third weekly loss in a row as the dollar’s sell-off accelerates.
USD/CAD falls after weak non-farm payrolls data
Higher crude oil increases interest in the Canadian dollar
The Canadian dollar, the world’s fifth largest crude oil producer, tends to be influenced by the development of oil prices. Indeed, the Loonie fell to its lowest level since 2016, when oil prices became negative.
Today the USD/CAD is falling as forex investors react to rising oil prices. The price of Brent is only 35 cents below 50 dollars, while the price of West Texas Intermediate (WTI) has risen to 46.25 dollars. Overall, the two benchmarks have risen more than 200% from their YTD lows.
The price is rising today after OPEC and its ten allies reached an agreement in January to increase production by 500,000 barrels. This increase is less than that proposed by countries such as the United Arab Emirates (UAE). In addition, the Covid vaccine has strengthened confidence that demand will increase again next year.
Employment figures in the USA and Canada
The USD/CAD is also falling because of the important job numbers from the USA and Canada. In a statement, the US Bureau of Labour Statistics (BLS) stated that the American economy created more than 245,000 jobs in November. This was less than the previous month’s increase of 638,000 and is mainly due to the freezing measures imposed by several states. Economists expected the economy to create 469,000 new jobs.
At the same time, the unemployment rate fell slightly to 6.7%, while wages rose by 4.4%. The employment rate also rose to 62%.
Meanwhile, data for Canada showed that the country created more than 62,000 new jobs in November. This was a smaller increase than that of the previous month (83 thousand). The unemployment rate declined to 8.5% while the employment rate dropped to 65.1%.
Nevertheless, millions of people in the two countries are unemployed and analysts believe that the situation will continue for years to come.
Technical Outlook USD/CAD
USD/CAD technical table
On the four-hour chart, we can see that the USD/CAD made a significant bearish breach this week, as it dropped below the November 9th low of 1.2924. Today the pair is trading at 1.2862, the lowest level since 2018.
The bearish trend is supported by the moving averages of the 50-day and 25-day squares and the descending trend line that is shown in yellow. The Average Directional Index (ADX) also rose to 44. Therefore, the pair is likely to continue to fall, with the next support level at 1.2800.