Cars and taxi cabs on 7th Avenue and Broadway at Times Square. Image source: dibrova © 123RF.com
Last Friday, the US Bureau of Labor Statistics delivered better-than-expected employment numbers for August, which bolstered the greenback's recuperation.
The Non-Farm Payrolls for the previous month surpassed the consensus forecasts, which were expecting unemployment to drop from July's 10.2 per cent to 9.8 per cent. Instead, the US labour market continued to grow for a fourth consecutive month, as the rate was reduced to 8.4 per cent in August.
US Unemployment Rate. Image source: TradingEconomics.com
Meanwhile, the Canadian labour market also recorded a reduction in the unemployment rate from 10.9 per cent to 10.2 per cent, which missed the initial expectations marginally by 0.1 per cent.
The August NFP report is welcoming news for Jerome Powell and the FED, as an emphasis on maximum employment fostered by an accommodative monetary policy was given at the last Jackson Hole Symposium.
The faster-than-expected pace of recovery can be attributed partly to the robust performance of the US manufacturing sector that was recorded over the same period.
Meanwhile, the dollar continues to rally because of these positive economic developments. Investors and traders are rethinking the role of the greenback in a post-coronavirus world, and the spillover effect of this can already be seen in other markets as well.
Oil and platinum futures continue to slide as the greenback gains momentum.
As can be seen on the 4H chart below, the USDCAD pair rebounded from the psychologically significant support level at 1.30000 and is currently in the process of developing an ostensibly bullish market bias.
The price action formed a minor bearish retracement before starting to consolidate around the 50-day MA (in blue). Once this interim consolidation is over, the price action would be ready to resume appreciating towards the next target level, which is encapsulated by the major resistance at 1.33150.
The expectations for the dollar's continued strengthening are supported by the fact that the price action remains concentrated above the three MAs as presented below.
The three are currently establishing an ascending order in which the 10-day MA (in red) would be placed above the 30-day MA (in green), which, in turn, would be trading above the 50-day MA.
USDCAD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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