USD/CAD forms bullish pennant amid weak US and Canada jobs data
- The USD/CAD has formed a bullish pennant on the four-hour chart.
- Canada and the US delivered weak employment numbers on Friday.
- The Canadian economy lost more than 200k jobs
The USD/CAD price wavered on Friday after the relatively weak employment data from Canada and the United States. The pair is trading at 1.2800, which is below yesterday’s high of 1.2845.
Weak Canadian jobs data
The Canadian economy continued to deteriorate in January as the number of coronavirus cases rose. As a result, the overall labour market deteriorated, according to the latest data by Statistics Canada.
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Canada lost more than 212,000 jobs in January after losing another 68,000 in the previous month. Economists polled by Reuters were expecting the economy to lose 47.5k jobs.
As a result, the country’s unemployment rate rose to 9.4% in January while the participation rate dropped to 64.7%. This trend happened as several states in the country moved back to lockdown to slow the virus.
The USD/CAD price also reacted to the trade numbers published by the bureau. In December, the country exported goods worth more than C$47.32 billion, higher than the previous month’s C$46.60 billion. In the same month, imports dropped from more than C$50.16 billion to C$48.1 billion. As a result, the trade deficit narrowed to about C$1.7 billion.
Meanwhile, the USD/CAD was unchanged as investors in forex digested the weak US nonfarm payroll numbers. In January, the American economy added just 49,000 jobs after losing more than 140,000 jobs in December. This trend happened as more American states continued with their lockdowns.
The American unemployment rate dropped to 6.3% while the U6 rate dropped to 11.6%. The latter number is important since it also includes the number of people working part-time for economic reasons. Manufacturing payrolls fell by more than 10,000 while the government added more than 43,000 jobs.
USD/CAD technical outlook
The four-hour chart shows that the USD/CAD has been moving sideways in the past few days. It has also formed a bullish pennant pattern that is shown in blue. Further, the pair is being supported by the 25-day and 15-day smoothed moving averages (SMA). Therefore, the most likely outcome is where the pair breaks-out higher. As you will find in our free forex trading course, the bullish pennant and flags are usually continuation patterns.