New York State Department of Labor. Image source: John Minchillo/AP
In a surprising turn of events, the labour market conditions in North America improved considerably on a monthly basis amidst the gradual lifting of containment restrictions.
The Canadian unemployment rate rose marginally by 0.7 per cent, which is still welcoming news because the final results fell short of the initial market expectations.
Canada Unemployment Rate. Image source: TradingEconomics.com
Meanwhile, the unemployment rate in the US fell by 1.4 per cent, which is a major surprise. Most market experts weighed in on another hike in headline unemployment due to the impact of the coronavirus fallout.
In comparison, the consensus forecasts were projecting a sizable upsurge in the rate to 19.7 per cent, which would have been comparable to the speed with which jobs were lost during the Great Depression.
Instead, 2.5 million jobs have been added to the US labour market in May. With that, the findings of the Non-Farm Payrolls for May met the projections of the ADP, which was released earlier this week.
US Unemployment Rate. Image source: TradingEconomics.com
This is the first significant indication that the bottom of the coronavirus-inspired economic downturn has already been reached, and that the worst from the crisis is now over.
Today's data is welcoming news for the ongoing recovery process as it signifies the robustness and efficiency of the FED's accommodative monetary policy, as well as of the effectiveness of the comprehensive fiscal policy that was implemented by the US government.
While the Canadian labour market has not performed as well as its southern counterpart, the lesser than expected rise in the unemployment rate underpins the ongoing stabilisation of the Canadian economy as well.
These developments have bolstered the underlying volatility on the USDCAD, which continues to advance in a downwards sloping channel.
The price action is currently performing as per our projections from our last analysis of the pair.
As can be seen on the 4H chart below, the price action continues to fall while being contained within the boundaries of the downwards sloping pitchfork tool.
However, this trend could be challenged as the underlying demand for the greenback is likely to increase on the overwhelmingly positive employment data.
The momentary behaviour of the MACD is already illustrating a marginal increase in the underlying bullish momentum.
USDCADH 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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