Loonie slammed by weak Canadian jobs growth

The Japanese yen is the top performer against a stronger dollar in pre-market trade with the yen holding its ground with a fractional advance of just 0.01%. Although today’s non-farm payroll report missed consensus on the headline figure with a read of 80K for the month of October, upward revisions to the September print and a tick down in the unemployment rate to 9.0% supported the dollar which advanced against all its major counter-parts coming into the US open. As noted in yesterday’s USD Trading report, the response the employment print was rather muted as expectations for jobs growth remain hampered after the Fed reaffirmed projections for “frustratingly slow” jobs and economic growth in the coming months.

The USD/JPY pair continues to hold above the 38.2% Fibonacci retracement taken from the intervention advance at the 78-figure with subsequent support targets seen at 77.75 and the 50% retracement at 77.50. Topside resistance holds at the 23.6% retracement at 78.55 followed by the 79-handle and Sunday’s high of 79.50. Again we note that it’s likely that any yen advances will be tempered as traders remain reluctant to test the resolve of Japanese officials by lifting the yen too much too fast.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

77.71

50-Day SMA

76.81

20-Day SMA

76.80

2011 JPY High

75.60

The loonie plummeted in pre-market trade after a dismal Canadian jobs report showed that the economy had lost 54K jobs in October, grossly missing estimates that called for a gain of 15K. The loss was accompanied by a 0.2% increase in the unemployment rate which now stands at 7.3%. The Canadian dollar promptly fell against the greenback with the USD/CAD climbing more than 1.15% at the open of US trade. Interim support rests just below current price action at 1.0180 with subsequent floors seen at 1.0140 and the 23.6% Fibonacci extension taken from the September 16th and October 27th troughs at 1.0010. A breach above initial resistance at the 1.02-figure eyes topside targets at the 38.2% extension at 1.0220, 1.0260, and the 50% extension at 1.0320. Look for the dollar to remain well supported in North American trade as traders reduce risk holdings ahead of the weekend where further developments out of Europe could shift broader market sentiment.

Key Levels/Indicators

Level/Indicator

Level

100-Day SMA

0.9894

50-Day SMA

1.0090

20-Day SMA

1.0125

2011 CAD High

0.9406

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
WEB:
www.DailyFX.com

About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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