Canadian dollar keeps firm tone despite downbeat Canada’s labor data

The USDCAD continues to trend lower and on track for the second straight big weekly loss, as Canadian dollar received fresh boost from unexpected BOC rate hike earlier this week and renewed hawkish stance, which suggests that further tightening is likely, as the central bank estimates that recent measures were not enough efficient to curb high inflation.

Bears were interrupted by negative Canada’s May labor report, released today and showing higher than expected rise in a number of jobless, while employment slumped by 17.3K in May after adding 41.4K new jobs previous month and strongly missed expectations for 23.2K rise.

However, downbeat labor data so far showed limited negative impact on CAD and likely to be insufficient to stronger counter very positive signals from BOC, as policymakers expected inflation to remain elevated and well above 2%, which will likely require further action from the central bank, as markets fully price for another 25 basis points hike in July.

Daily studies show strong rise in negative momentum and MA’s in bearish setup fueling bears, though a number of solid supports within 1.3315/1.3225 zone is expected to produce headwinds, along with oversold daily studies and probably slow bears in coming sessions.

Larger bears are expected to remain in play as long as upticks stay capped under 1.3440 zone.

Next week’s key events (US inflation / Fed rate decision) are expected to provide fresh signals.

Res: 1.3371; 1.3396; 1.3445; 1.3484
Sup: 1.3320; 1.3301; 1.3262; 1.3225