USD/CAD Daily Chart
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USD/CAD Breakout in Focus Ahead of NFP, Canada Employment

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Talking Points:

- USD/CAD Rebound to Gather Pace on Dismal Canada Employment Report.

- USDOLLAR Extends Rebound as ISM Non-Manufacturing Beats Expectations.

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USD/CAD

Chart - Cre ated Using FXCM Marketscope 2.0

  • USD/CAD may continue to retrace the decline from earlier this year amid the failed attempts to close below 1.2510 (78.6% retracement), while the Relative Strength Index (RSI) breaks out of the bearish formation carried over from January.
  • Even though Canada Employment is anticipated to show another 2.0K expansion in April, an uptick in the jobless rate to an annualized 7.2% from 7.1% may dampen the appeal of the loonie especially if the Participation Rate holds steady at 65.9% for the fifth-consecutive month.
  • Will keep a close eye on the topside targets as USD/CAD appears to have made a meaningful low, with the first hurdle coming in around 1.2930 (61.8% expansion) to 1.2980 (61.8% retracement), followed by 1.3130 (38.2% retracement).

  • The DailyFX Speculative Sentiment Index (SSI) shows the FX crowd remains net-long USD/CAD since the first week of April, with the ratio hitting a near-term extreme coming into May as it edged above the +2.00 mark.
  • The ratio continues to come off of recent extreme as it currently sits at +1.06, with long positions 34.5% lower from the previous week, while open interest stands 7.3% below the monthly average.

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USDOLLAR (Ticker: USDollar ) :

Index Last High Low Daily Change (%) Daily Range (% of ATR)
DJ-FXCM Dollar Index 11830.50 11833.84 11786.83 0.20 76.57%

USD/CAD Breakout in Focus Ahead of NFP, Canada Employment
USDOLLAR Daily Chart

Chart - Cre ated Using FXCM Marketscope 2.0

  • Following the bullish-engulfing, the USDOLLAR may continue to track higher going into the highly anticipated U.S. Non-Farm Payrolls (NFP) report amid the recent series of higher highs & lows, while the RSI appears to be threatening the bearish formation carried over from the end of February.
  • A positive development may heighten the appeal of the greenback as the U.S. economy is expected to add another 200K, while Average Hourly Earnings are projected to increase an annualized 2.4% following the 2.3% expansion in March; signs of stronger wage/job growth may boost bets for a Fed rate-hike at the next quarterly meeting in June.
  • A break/close above 11,836 (61.8% retracement) to 11,843 (38.2% retracement) may spur a larger recovery in the USDOLLAR, with the next topside region of interest coming in around 11,898 (50% retracement), followed by 11,951 (38.2% expansion) to 11,965 (23.6% retracement) .
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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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