USD/CAD drops toward 1.28 after US NFP report
- NFP rises 228K to beat the market expectations.
- Wage inflation disappoints in November.
- Crude oil extends recovery on Friday.
The USD/CAD pair lost nearly 50 pips after the nonfarm payroll report from the United States and refreshed its daily low 1.2806 before staging a modest recovery. As of writing, the pair was trading at 1.2837, losing 0.12% on the day.
The data released by the U.S. Bureau of Labor Statistics on Friday revealed that following a 244K increase in October (revised down from 261K), total nonfarm payroll employment rose by 228K in November, beating the market estimate of 200K. The unemployment rate remained unchanged at 4.1% as expected and the average hourly earnings failed to meet the consensus of 0.3% as it came in at 0.2% in November. Although the initial reaction lifted the DXY to a fresh multi-week top at 94.07, concerns over the soft wage inflation didn't allow the greenback to preserve its bullish momentum. At the moment, the DXY is at 93.85, still up 0.11% on the day.
Today's data from Canada showed that the industrial capacity utilization stayed unchanged at 85% and met the experts' estimates.
In the meantime, following the heavy sell-off witnessed during the first half of the week, crude oil prices reversed course and started to retrace the weekly losses. As of writing, the barrel of West Texas Intermediate is trading at $57.60, gaining 1.6% on the day, and helping the commodity-sensitive loonie stay strong against its major rivals.
Technical outlook
The initial resistance for the pair aligns at 1.2870 (200-DMA). A weekly close above that level could open the door for further gains toward 1.2915 (Oct. 31 high) and 1.3000 (psychological level). On the downside, supports are located at 1.2800 (psychological level), 1.2765 (20-DMA) and 1.2715 (50-DMA).