The USD/CAD currency pair successfully extended its early-day bullish bias and hit the intra-day high well above 1.3100 level due to the broad-based U.S. dollar strength backed by the Friday released upbeat U.S. jobless rate and wage growth data. The U.S. dollar gains were also supported by the high safe-haven demand in the market. Across the pond, the reason for the currency pair bullish bias could also be attributed to the weaker oil prices, which ultimately undermined the demand for the commodity-linked currency, the loonie, and contributed to the currency pair gains.
Currently, the USD/CAD currency pair is currently trading at 1.3105 and consolidating in the range between 1.3050 - 1.3112. The market trading sentiment reporting losses on the day as the US-China tussle picked up the pace. The gloomy headlines concerning the Brexit also weighed on the market trading sentiment, which eventually increased the market's safe-haven demand. This, in turn, underpinned the U.S. currency.
Also supporting the U.S. dollar was the upbeat U.S. labor market report. At the data front, the headline Non-farm payrolls data for August missed expectations with +1371K. However, the unemployment rate dropped to 8.4%.vs 9.8% expected. In the meantime, the Average Hourly Earnings exceeded predictions, with +0.4% MoM in August vs. 0% expected.
At the USD front, the broad-based U.S. dollar managed to maintain its bullish trend and remain on the day's bullish track. However, the U.S. dollar gains were also supported by the upbeat U.S. labor market report, which showed a decline in the unemployment rate and a rise in U.S. Treasury yields. Thus, the gains in the U.S. dollar kept the currency pair higher. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.18% to 92.882 by 12:05 AM ET (5:05 AM GMT).
Across the Ocean, the crude oil prices remain on the bearish track as Saudi Arabia started the massive monthly price cuts for supply to Asia in 5-months. Also weighing on the oil prices were the fears of oversupply amid the coronavirus pandemic. Thus, the declines in oil prices undermined demand for the commodity-linked currency the loonie and contributed to the currency pair gains.
Due to the Labor Day Holiday in the U.S., market traders could be inactive on the day. However, the updates on the virus and Sino-American tension will be key to watch. In the meantime, the market players will be interested in the headlines concerning the Brexit.
Daily Support and Resistance
S1 1.289, S2 1.2986, 3 1.3025
Pivot Point 1.3083
R1 1.3121, R2 1.3179, R3 1.3275
The USD/CAD is trading with a bullish bias at 1.3104 level, holding below an immediate support area of 1.3138 level. The closing of candles below 1.3138 level is likely to drive the selling trend until 1.3052 support. Simultaneously, the bullish breakout of the 1.3138 level can drive the buying trend until 1.3185 and 1.3245 level today. Overall the technical indicators suggest neutral bias as the RSI is tossing above and below 50, while the 50 EMA is extending resistance at 1.3105 level. Good luck!