Canadian Dollar wavers after US NFP beats the market and Canadian jobs additions slump

• The Canadian Dollar is etching in a broad range on NFP Friday.
• Canada jobs additions crumble, US jobs easily beat the street.
• Despite weak labor figures, Canadian wage pressures persist.

The Canadian Dollar (CAD) slumped to a new low for the week against the US Dollar (USD) before surging to a three-day high as markets whipsaw after a bumper US Nonfarm Payrolls (NFP) report crushes market forecasts. 

Canada saw a hamstrung labor market add fewer jobs than the margin of error on the figure itself, coupled with persistent wage growth that accelerated to a two-year high.

Daily digest market movers: Canadian Dollar churns, investors grapple with NFP print

• US Nonfarm Payrolls are dominating the headlines, adding 216K net new jobs to the US employment landscape in December compared to the 160K forecast.
• Despite the beat, revisions continue to plague the data, dragging November’s 199K down to 173K and October’s 150K getting revised even further lower to 105K.
• Average Hourly Earnings in the US ticked up slightly from 4% to 4.1% for the year ended December, and the US Unemployment Rate also held steady at 3.7% in December, where market forecasts expected a tick upwards to 3.8%.
• Despite the overall upshot in US data, the US ISM Services Purchasing Managers’ Index (PMI) in December broadly missed expectations, printing at a stunted 50.6 versus the forecast decline from 52.7 to 52.6.
• On the Canadian side, the Unemployment Rate held flat at 5.8%, snubbing the forecast 5.9%.
• Canadian Average Hourly Wages growth surged from 5.0% to 5.7% in December, a two-year high.
• Forecasts for Canadian Net Change in Employment completely missed the mark, with Canada adding a paltry 0.1K new jobs in December versus the forecast decline from 24.9K to 13.5K.
• Canadian December Ivey PMIs remain upbeat in the seasonally-adjusted figure, moving from 54.7 to 56.3, but cyclical factors are doing a lot of the heavy lifting, with the non-seasonally adjusted PMI slipping from 53.2 into contractionary territory at 43.7, a 12-month low.

Technical Analysis: All that effort just to push the Canadian Dollar in a circle, USD/CAD returns to midrange

It’s a fundamentals-driven day for the Canadian Dollar, with NFP sparking an initial surge in the USD/CAD towards 1.3400 following the jobs release, however, markets quickly reversed course to plunge into 1.3290 before settling back into familiar territory near 1.3330.

Despite the US Dollar broadly falling against most of major currencies heading into the weekly close, the CAD is struggling to draw interest, underperforming most of its peers, gaining a fifth of a percent against the Greenback.

With the USD/CAD pushing into the middle on Friday, the pair is at risk of a pause on the daily candlesticks, hung out to dry in no man’s land below the 200-day Simple Moving Average (SMA) at the 1.3500 handle while the 50-day SMA accelerates into a downside crossover of the longer moving average. 

USD/CAD Hourly Chart

USD/CAD Daily Chart