The US dollar continued its bull run against the Canadian dollar as the October NFP report showed that the US labour market was more resilient than expected.

The US economy added 128k new jobs in October vs only 90k expected, despite the GM strike and the 45k workers who were off the job the last month. The unexpected rise in US hiring validates the Fed’s decision to take any further rate cuts off the table for the time being and indicates that the economic expansion might continue on the wings of a robust labour market.

The pair is still consolidating around the Fed and Bank of Canada meetings however, trading near the weekly high of 1.3208.

Other highlights from today’s NFP reports include a lower-than-expected rise in average hourly earnings (0.2% vs 0.3% expected) and a slight increase in the unemployment rate to 3.6%, up from September’s reading of 3.5%.

The US dollar dominates in terms of important market reports today. The ISM manufacturing PMI came in at 48.3, which marks the third consecutive monthly contraction in the manufacturing sector. Market expectations were set at 49.0.

Later today, Fed voters Clarida, Quarles, and Williams are delivering a speech which may clarify future Fed actions.

In the short-term, interest rate spreads between the US and Canada don’t support further USD gains. The CAD is also looking for catalysts to pick a direction at the moment.

From a technical standpoint, the USD/CAD pair is trading near a mid-term resistance level and the 50% Fib retracement level, measured from the peak to the trough of the recent CAD strength.

Today’s indecisive candle suggests that the pair might be tilted downwards ahead of next week, with Tuesday’s low of 1.3042 acting as an important support level in the short-term.

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