USD/CAD braces to 1.3500 after hitting a 4-day peak after US NFP data

• USD/CAD jumped in response to the US jobs data.
• Despite the lower-than-expected job growth in March, the US Dollar gained ground.
• Average Hourly Earnings edged lower, while the jobless rate remained unchanged.

The USD/CAD touched four-day news highs after the US Nonfarm Payrolls, though it retreated somewhat, as the US jobs data showed that the labor market continued to slow down. At the time of writing, the USD/CAD trades volatile within the 1.3497-1.3510 range, holding to its earlier gains.

US Dollar strengthens, despite a soft US NFP report

On Friday, the US Bureau of Labor Statistics (BLS) showed that US job growth in March slowed to 236K, lower than the expected 240K and the 311K jobs added in February. The Average Hourly Earnings increased by 4.2% YoY, falling short of the forecasted 4.3%, and the Unemployment Rate was 3.4% YoY, 0.2% lower than the anticipated 3.6%.

In the fixed-income market, US Treasury bond yields extended their gains, with the 2-year US T-bond yield, the most sensitive to interest rates, rising 12 basis points. The CME FedWatch Tool made a U-turn, with odds for a 25 bps rate hike by the US Federal Reserve itching up, to 59.8%, compared to Thursday’s 49.2%.

USD/CAD 1-Hour Chart Reaction

On the headline, the USD/CAD bounced from around 1.3500 and hit a daily high of 1.3530, breaking the R1 daily pivot at 1.3518 on its way north. Of late, the USD/CAD pair reversed its course, stabilizing around the current exchange rates but holding the spot price at around 1.3500. For a bullish resumption, the USD/CAD needs to reclaim 1.3518, so it can re-test the day’s high before testing the R2 pivot at 1.3540. Conversely, a fall below 1.3500 will exacerbate a dip toward the daily pivot at 1.3481.