According to Statistics Canada, the unemployment rate in the country fell to 12.3 per cent the previous month. The findings of the labour force survey for June missed the consensus forecasts by 0.3 percentage points.
Even still, the observed performance illustrates an improvement in Canada's employment conditions on a monthly basis. The positive news is that headline unemployment fell from the 13.7 per cent that was recorded in May.
Canada Unemployment Rate. Image source: TradingEconomics.com
This is the first piece of welcoming news that underscores the tumultuous future road to economic recovery in Canada, following the catastrophic GDP numbers that were recorded in the wake of the coronavirus crash.
Upon the release of the report, the Canadian dollar did not react quite sharply to the news. The USDCAD pair depreciated marginally during today's trading session; however, the pair remains range-trading.
As can be seen on the daily chart below, the USDCAD has reached the lower end of a major bearish dropdown, which was exacerbated by the coronavirus rout. Since March, the currency pair has been consolidating within the boundaries of a narrow range.
The Accumulation range spans between the 23.6 per cent Fibonacci retracement level at 1.36332, and the major support level at 1.35200. This subdued price action entails the likely transition of the underlying market sentiment from being mostly neutral, into becoming more concentrated.
The range-trading environment is likely to be broken by the establishment of a new bullish breakout, which could be perceived as the initial step in the development of a new bullish run.
These expectations are backed by the fact that the US dollar continues to be strengthening at present.
The first crucial test for such a newly emerging uptrend is going to occur once the underlying price action reaches the 1.38700, and the major resistance level there.
If the presently rising bullish commitment in the market proves to be substantial enough, and the price action manages to break out above this level, the next target would be encompassed by the major resistance level at 1.42200.
The primary expectations for the creation of such a bullish trend are supported by the fact that the underlying bullish pressure is continuously rising. The steadily advancing Stochastic RSI indicator confirms this.
USDCAD 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
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