Passengers and workers wearing mask walking to their destination at the airport terminal. Image source: khairil77 © 123RF.com
The U.S. Bureau of Labour Statistics (BLS) just released the December Non-Farm Payrolls. According to the labour market survey findings, the American economy has lost 140 thousand jobs over the last month of 2020.
The underlying performance was missed completely by the initial market forecasts, which were anticipating another expansion of the labour force by an additional 60 thousand jobs. It also underpins a drastic dive from the 245 thousand new jobs that were created in November.
U.S. Unemployment Rate. Image source: Trendsharks ©, created with TradingView.com
Even still, headline unemployment was reported at 6.7 per cent for the second consecutive month. This is welcoming news given that an uptick by 0.1 per cent was expected to be observed. This also marks the first instance in seven months that the American economic recovery was not robust enough to reduce headline unemployment.
The immediate market reaction was somewhat subdued by the fact that the preliminary ADP report had already demonstrated the decline in jobs two days prior. That is why the adverse impact of the news was cushioned.
Meanwhile, the situation in the U.S.' northern neighbour is even gloomier. Statistics Canada revealed that the national labour force has contracted by 62.6 thousand jobs in December, which completely invalidates the 62.1 thousand new positions that were created in November.
Canadian unemployment thus climbs marginally by 0.1 per cent to 8.6 per cent over the same period.
Canada Unemployment Rate. Image source: TradingEconomics.com
The December payrolls thus failed to deliver the much-needed pain relief for the reeling U.S. dollar, which continues to be struggling against the Loonie. The greenback is greatly disadvantaged by the historically low yields, as global investors' demand for the currency wanes. Meanwhile, the Canadian dollar is supported by rising oil prices.
As shown on the 4H chart below, the pair's price action is currently concentrated below the lower boundary of a massive Accumulation range. It remains to be seen whether this will pan out to be a minor Spring formation, or the preceding Markdown will be continued instead.
The development of a Dead Cat Bounce pattern could be an affirmation of the second possibility. Moreover, the underlying momentum remains ostensibly bearish, as demonstrated by the MACD indicator.
Nevertheless, there is increasing evidence suggesting that the greenback could recuperate soon.
USDCAD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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