The Canadian dollar is unable to recover from the disappointing Canadian jobs report. In addition to the painful job losses, the fresh worries about Chinese growth also find the loonie exposed.
USD/CAD is getting comfortable in a high and well defined range with a double bottom and double top. How long will this range last? What is the next move?
Here is how it looks on the chart:
USD/CAD range
USD/CAD traded under 1.10 before the jobs report and screamed higher settling above 1.1070. This is the bottom border of the high range. It then continued higher and peaked twice at 1.1130. A drop found support once again at 1.1070. This is quite a clear range. 1.1093 is a minor line within the range.
Further lines are 1.1224, the multi-year peak, and the round number of 1.10. For more lines, see the Canadian dollar forecast.
Reasons for CAD weakness
On Friday, Canada reported a loss of 7K jobs. The decrease in the number of hired people was somewhat sweetened by the composition: full times jobs were actually gained. Nevertheless, a gain in jobs was expected, so the bottom line was a big disappointment.
Over the weekend, China reported a trade balance deficit, and this included a big drop in exports. While experts put the blame on distortions due to the Chinese new year, also here, the bottom line just looks bad and joins worries about global growth. The Australian dollar suffered a bigger hit due to its dependency on China, but also the loonie was not spared: less global growth means less oil exports from Alberta’s tar sands.
The Canadian calendar is relatively thin this week.
