USDCAD, H1 & Daily
Canada employment dipped 1.1k in April after the 32.3k gain in March, coming in contrary to expectations for an increase (median +20.5k). But full time jobs grew 28.8k in April after the 68.8k surge in March. Part time jobs fell 30.0k after a 35.9k contraction in March. The unemployment rate was 5.8%, holding at the 40-year low of 5.8% seen in March. The participation rate slipped to 65.4 from 65.5. Hourly earnings of permanent employees accelerated to 3.3% y/y in April from 3.1% in March. While the lack of growth in total jobs is disappointing, the gain in full time jobs and pick-up in earnings growth supports the Bank of Canada’s constructive view of the economy. A robust Oil price adds to the positive vibe for Canadian Q2 and Q3 growth outlook.
Additionally, U.S. import prices increased 0.3% in April, while export prices rose 0.6%. The flat reading on March import prices was revised down to -0.2% (and February was bumped to 0.2% from 0.3%). The 0.3% March export price gain was not revised (nor was February’s 0.2%). On a 12-month basis import prices are up 3.3% y/y, unchanged from March (revised from 3.6% y/y). The 12-month export price index rose to a 3.8% y/y pace from 3.4% y/y. For April imports, petroleum prices bounced 1.6% versus the prior 2.2% decline (revised from -1.3%). Excluding petroleum, prices were up 0.1% from unchanged (revised from 0.1%). Import prices with China fell 0.1% after a 0.2% gain (revised from 0.1%), and were up 0.6% with Canada versus -0.4% (revised from -0.2%). For export prices, agricultural price declined 1.2% after jumping 3.2% previously (revised from 3.4%). Excluding ag, prices bounced 0.7% versus unchanged (revised from -0.1%).
The combined news dump saw USDCAD to leap from 15 day lows under 1.2730 to 1.2760. The pair had been trending down all day and two positions were triggered for the EMA Crossing Strategy prior to the news release for a net gain of 23.5 pips. The current hour suggests there could be more upside reversal as the North American trading session gets into swing.
On the higher time-frames the Daily chart triggered a short position, against the higher Monthly trend but in line with the Weekly trend. The breach and clear break of the 50 and 20 day moving average, the weakening of the RSI and a rejection of the key 1.3000 and new fractal high on Monday were all contributory factors. The positive Oil sentiment adds to bullish CAD positions. The ATR (14) is currently 81 pips. Entry was taken at 1.2764, Target 1 1.2705, the 61.8 Fibonacci level and Target 2 the 200 day moving average at 1.2645 and a stop loss above the turn at 1.2955.
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