Cad Gains Ground Post Nfp

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Cad Gains Ground Post Nfp

Canadian Dollar (Cad) Gains Ground Post Nfp

The Canadian Dollar (CAD) managed to gain some of its lost ground against the greenback on Friday. A stronger NFP report initially sent the Canadian Dollar (CAD) lower.

Additionally, the labor market data from Canada was also weak, which further sent the USD/CAD pair higher. However, it appears that the Canadian Dollar (CAD) has recovered since then as the markets digest the NFP report.

Weak Wage Growth Ignites Rate Cut Hopes

The NFP report was extraordinary and took all the major players by surprise. This led to a bullish reaction in the USD and bond yields.

However, a closer look at the data showed that the wage growth (yearly) is sitting at its lowest levels. This particular piece of data has reignited the hopes of the June or July rate cut from the Federal Reserve. Meanwhile, the comments from Fed Michelle Bowman were mostly hawkish, which suggests otherwise.

If we look at the Canadian labor market, the net employment numbers have gone down in March. That's why we can say that the data was mostly negative, but it was offset by the PMI, which showed a modest improvement.

For now, it appears that the USD/CAD is now all ready to test the 1.2620 resistance area and maybe settle above it. However, any strong data from the Canadian side could alter this scenario as well.

The bottom line is that the USD/CAD is now driven by the labor market reports from the USA and the Canada. The initial reaction to the US NFP was positive but it soon reversed due to the poor wage growth on yearly levels.

The USD/CAD technical chart shows that the price is trading within a bullish channel. However, the prices are fast approaching the 1.3640 resistance, which is also an important trend line. A break of this level will open the doors to the 2.3710, followed by the 1.3770.

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