USD/CAD: US Dollar Gives Back Gains Against the Canadian Dollar Following Friday’s Massive NFP Beat

The US Dollar was mostly unchanged to slightly lower against the Canadian dollar on Monday following Friday’s extensive gains on better-than-expected labour market reports.

To recall, the US economy added a whopping 266K new jobs in November, beating market expectations of a 181K raise and giving the Fed more reasons to stick to their current interest rates. The Unemployment rate fell to a 50-year low of 3.5% and wages rose as well, as shown by the Friday report.

Canadian numbers were less impressive. Employment fell by 71.2K and the unemployment rate rose to 5.9%, missing forecasts of a 10K raise and a 5.5% unemployment, respectively.

Investors had already positioned themselves on the futures market accordingly, as the latest CoT report showed. Covering futures positioning in the week through last Tuesday, CAD investors added only $82 million to their net long positions, taking the total to $1.6 billion. However, bullish bets in the US dollar rose by $700 million, taking the total to a fresh 6-week high of $19.6 billion.

On the trade war front, markets are still waiting for signs of progress in trade talks between the world’s two largest economies. With only seven days to go until the December 15 tariff deadline, it’s still unclear whether a deal will be signed.

White House economic adviser Larry Kudlow said late last week that the amount of US agricultural products that China was willing to purchase remained on of the issues in the talks.

From a technical standpoint, the USD/CAD pair faced some selling pressure at the 61.8% Fib level that aligns with a horizontal resistance zone of the recent trading range, pushing the price lower today. As of 2:48 p.m. London time, the USD/CAD pair traded at 1.3240.

Strong moves caused by the NFP missing or beating market forecasts to a large extent are usually reversed on Monday, which can also be observed in today’s trade.

Friday’s high of 1.3270 will likely cap further gains in the short run, while the US dollar could be on its way to give back more gains against the Canadian dollar by the end of the trading day.

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