Record Low Unemployment Boosts The Bullish Case
Dr. Duru | Jan 07, 2018 01:49AM ET
Last week, Friday’s jobs report all but sealed the deal on the bullish case for the Canadian dollar and makes it more likely that the BoC will be forced to hike rates again sooner than later.
The Canadian jobs report dominated the U.S. jobs report as the Canadian dollar surged against the U.S. dollar. USD/CAD continued its descent through the lower Bollinger Band® (BB) channel.
The unemployment rate in Canada dropped from 5.9% to 5.7%, creating a record low since Canada started tracking comparable data exactly 42 years ago. Quarterly employment growth was at its strongest since the second quarter of 2010.
Canadian unemployment continued a sharp decline in place for the past 2 years.
Speculators are still sleeping on the Canadian dollar. Last week, net long contracts declined again and settled at just 14,739 . The anemic level of bullishness augurs well for further strength in the Canadian dollar when speculators get active again. I had a short USD/CAD position in play ahead of Friday and closed it out in the favorable wake of the jobs report.
Here are additional charts to confirm the relative and building strength of the Canadian dollar.
AUD/CAD is on a slow but steady downtrend now defined by the 200-day moving average (DMA)
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EUR/CAD broke through 50DMA support but managed to bounce off 200DMA support.
GBP/CAD confirmed 50DMA resistance. Like EUR/CAD, GBP/CAD also bounced from 200DMA support.
Be careful out there!
Full disclosure: no positions
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