Friday witnessed a broad rise in the Canadian Dollar (CAD) against major currencies, although the US Dollar (USD) took the lead for the day following the release of robust US Nonfarm Payrolls (NFP) data.
With Canada absent from the economic calendar on Friday, CAD investors eagerly await the Canadian Ivey Purchasing Managers Index (PMI) figures scheduled for the upcoming Tuesday. Bank of Canada (BoC) Governor Tiff Macklem is also set to make an appearance on the same day.
Key Market Movers: US NFPs Dominate
US Nonfarm Payrolls (NFPs) took center stage on Friday, impressively reaching their highest level in a year at 353K in January, surpassing the forecast of 180K. Additionally, December’s NFP figures underwent a substantial upside revision from 216K to 333K. January’s US Average Hourly Earnings also exceeded expectations, registering a 0.6% increase compared to the forecasted 0.3% and the previous month’s 0.4%. Year-over-year Average Hourly Earnings climbed to 4.5%, surpassing the forecast of 4.1% and the last print of 4.4% (revised upward from 4.1%).
The US Dollar experienced a significant surge across the entire FX market post-NFP, making gains against all major currency peers. As a result, the USD emerged as one of the top-performing currencies of the week, showing strength or stability across the board. Meanwhile, the Canadian Dollar saw gains against most peers but weakened against the Greenback, with the NFP beat contributing to the USD’s top spot for the week.
Technical Analysis: USD/CAD Enters Consolidation Pattern
The Canadian Dollar demonstrated strength against various major currencies, posting gains against the Japanese Yen (JPY) and the New Zealand Kiwi (NZD). However, it lost ground against the US Dollar, causing the USD/CAD to approach the week’s opening bids.
USD/CAD surged above the 200-hour Simple Moving Average (SMA) near 1.3443 and tested the 1.3480 neighborhood on Friday. This upward movement propelled the pair back into a consolidation pattern between the 50-day and 200-day SMAs. USD/CAD is poised to continue churning in near-term congestion, with prices remaining close to the 200-day SMA near the 1.3500 handle. The technical analysis indicates potential stability in the pair amid ongoing market developments.
