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US Dollar to Canadian Dollar at 1.2570 as Job Market Grows

Better than expected employment report moves the US dollar to Canadian dollar currency pair higher, towards resistance levels at 1.2570 levels, on July 7.

US Dollar to Canadian Dollar Rises to Strong Resistance at 1.2600

The loonie eased on Friday to close at 1.2446 for the weekend. It was at 2021 lows at q.20 levels in June 2021 but recovered to 1.2460 levels in July.

The US dollar to CAD foreign currency exchange surged to 1.2600 on Thursday on a good employment report. The currency exchange reached the April 2021 highs before moving lower. The 200-day SMA is at 1.2650 levels, and it is a tough hurdle to overcome, say analysts.

Canadian to US dollar is at 0.79 levels on July 19, 2021. The CAD to USD currency rate reached a high of 0.83 levels in May 2021 but moved lower to 0.79 in July 2021.

Crude oil prices were lower to almost -5.5% last week, which has weighed down the Canadian dollar forex market. The Canadian to US dollar saw a steep slide to below 0.80 levels in July as prices decreased.

Investors will keep a strict watch on the interest rate decision next week, which will keep the USD/CAD exchange foreign currency volatile.

US Dollar to Canadian Dollar at 1.25 Levels
US Dollar to Canadian Dollar at 1.25 Levels

US Dollar to CAD Surges with Good Employment Growth

The unemployment rate has fallen in June to 7.8% from 8.2% in May 2021, reflecting positively on the US dollar to CAD foreign exchange market.

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The easing of coronavirus restrictions has brought an increase in job opportunities. People are able to dine outside and resume cultural and recreational activities. The accommodation sector has been good in July in places like Alberta, Quebec, and British Columbia. However, Ontario is still facing some restrictions. Coronavirus infections reflect strongly on the global forex rates. But, the country is showing recovery as business activities bounds higher.

Retail sales improve as consumer confidence recovers. Spending capacity improves with the job market showing growth. The USD/CAD currency rate is higher, moving to April highs.

Personal care services and retail shopping allows people to enjoy outside life, bringing relief to the foreign exchange market. Small retailers and businesses are happy to have an increasing number of visitors. Consumers are willing to spend after staying indoors for a long time.

The number of people unemployed has come down by 61,000, while the labour force has gone up by 170,000 in June. It has gone up 0.6%, moving to 65.2%. However, full-time jobs have gone down by 33,200. Job losses show recovery by 89%, almost near the pre-pandemic days. Young people are finding jobs, raising youth confidence, which has been positive for the Canadian forex market.

But, labour shortages may soon affect the economy. Finding reliable staff has become an issue, say company heads. Many people are shifting jobs, and people expect salary hikes.

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Lockdown Easing and Economic Recovery

The government brought in strict lockdown restrictions to control the pandemic. The recent rollback of lockdown restrictions by the government encourages more economic activity in the country. The vaccine rollout is helping in the economic recovery. More and more vaccines help people to resist the deadly infection of the virus. Though lockdown restrictions curb infections, traces of the virus exist in each country.

The new Delta coronavirus variant is a cause of worry to global countries. It may bring down economic recovery, which may derail the re-opening of global economies and affect trade.

The unemployment rate has fallen to the lowest level since the pandemic started in March 2020. The exchange foreign currency has moved lower during the pandemic. But with recovery in virus infection, economies are re-opening.

Crude Prices and Canadian Dollar

The CAD has a strong correlation to crude oil prices, as it is rich in oil resources, and the currency is dependent on crude oil exports. The deadlock within the OPEC + countries affects crude oil prices. Crude prices were restricted during the Covid-19 pandemic by limiting output. But an impasse in talks between Saudi Arabia and the UAE has become a worry. Forex rates went down across global currency exchanges due to the deadlock between the two countries.

Oil prices have moved from a low of $70.83 per barrel to $73.90 per barrel. Crude imports from India and China lend support to the recovery of crude prices. Economic recovery among countries with high populations increases demand for crude oil, bringing a price rise.

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US Dollar Index

The dollar shows weakness despite the rally seen in the US Treasury Yields. The Bank of Japan monetary policy update is another event to look forward to. The US inflation data in the week ahead brings expectations to investors.

The US dollar faced stiff resistance at the 92.70 level. The dollar index closed at 92.116 levels last week, on July 9, 2021. The demand for safe-haven assets strengthened the US dollar mid-week towards the 92.70 levels.

In the Bank of Canada policy rate decision this week, investors will know more about the asset purchase tapering program to be taken by authorities. The policy rate will reflect on the US dollar to Canadian dollar foreign currency exchange.

 

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