By Ketki Saxena
Investing.com -- The Canadian dollar weakened against its USD counterpart today as robust US jobs data reaffirmed strength in the economy, raising the case for the US Federal Reserve to keep rates higher for longer. Fed expectations boosted the greenback along with Treasury yields, while souring risk sentiment further pressured the Canadian dollar.
The USD/CAD rose by over a 100 pips in the day, supported by a strong US dolla boosted by Fed expectations following ADP data that showed private payrolls rose by 235K in December, smashing market expectations for a 150K gain. The weekly jobless claims report also indicated strength in the US economy, declining to 204K, their lowest level since September.
The US Dollar strengthened after the reports, with the DXY climbing above 105.0 for the first time since December 8. Treasury yields also climbed, reaching multi-day highs across the curve
The Canadian dollar meanwhile gained some support from oil prices after U.S. data showing lower fuel inventories, although worries of slowing economic growth globally continues to weigh on sentiment.
On a technical level for the USD/CAD pair, analysts at FX Live note, “Buy trades should be considered from the support level of 1.3478, but with confirmation, since the level has already been tested. Sell deals are better to look for on the intraday time frames from the resistance level of 1.3530 or 1.3604, but with a confirmation in the form of a reverse initiative on the lower time frames or a false breakout.
Alternative scenario: if the price breaks down and consolidates below the support level of 1.3478, the downtrend will likely resume.”
Up next, tomorrow’s US Nonfarm Payroll report and the Canadian employment report will provide further impetus for the pair.