USD/CAD moves back to the falling wedge after weak Canada jobs data
- The USD/CAD erased the previous gains after the weak US and Canada jobs data.
- The US added just 559k jobs in May while the unemployment rate declined to 5.8%.
- In Canada, the country lost 68,000 jobs while the unemployment rate rose.
The USD/CAD retreated after the relatively weak employment numbers from the United States and Canada. The pair dropped to 1.2088, which was below this week’s high of 1.2130.
Canada and US jobs data disappoint
On Thursday, the USD/CAD pair jumped sharply after the relatively strong private payrolls data released by ADP. The data showed that the US private companies added almost a million jobs.
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A few minutes later, data by the Bureau of Labour Statistics (BLS) showed that the number of Americans filing initial jobless claims data declined to the lowest level since the pandemic started. All this raised the possibility that the US labour market continued to tighten.
In its report on Friday, the BLS said that the US non-farm payrolls increased by 559,000 in May. This was a better figure than the 278k that were released in April. However, the number was substantially lower than the median estimate of 650k. Further, private non-farm payrolls increased by 492,000, worse than the expected 600k.
Meanwhile, the number of average weekly hours remained intact at 34.9 while the participation rate declined to 61.6%. It was not all gloom. For one, the unemployment rate declined from 6.1% to a post-pandemic low id 5.8% while the average hourly earnings rose from 0.4% in April to 2.0% in May.
The USD/CAD also reacted to the relatively weak Canadian jobs data. The country’s unemployment rate increased from 8.1% in April to 8.2% in May while the participation rate fell from 64.9% to 64.6%.
In the same period, the country lost 68,000 jobs, which was worse than the expected loss of 20k jobs. It was nonetheless better than the previous decline of more than the previous 207k. Statistics Canada attributed the situation to the lockdowns that were implemented in May.
The USD/CAD pair declined from the day’s high of 1.2132 to 1.2080. On the four-hour chart, the pair managed to move back to the falling wedge pattern. It is also at the same level as the 25-day and 50-day weighted moving averages (WMA) while the two lines of the MACD have pointed lower. Therefore, the pair will likely keep falling as traders reflect on the weak jobs data.