Technical Analysis

USDCAD cracks back below the 100 hour MA

Swing area between 1.2577 and 1.2596 is the next downside target

The CAD has followed the other currencies in moving higher versus a weakening dollar after Chair Powell did not satisfy the taper hawks. 

Looking at the hourly chart, the price has moved back below its 100 hour moving average at 1.36372. Stay below that moving average keeps the bears more control. The next targets come between 1.25778 and 1.2596 (see red numbered circles and yellow area). That is home to a number of swing highs and swing lows going back to August 6. This week the lows from Tuesday, Wednesday and Thursday stalled within that area.

Given all the Fed speak and tilts toward tapering expressed this week, the chair seems to be blazing his own trail.  It will be an interesting dynamic as we go forward. Of course the employment report next week now becomes the key focus. Progress has certainly been made on the inflation front, but the employment situation remains somewhat tenuous especially for the chair.

Overall there are still 5– 6 million jobs that have not been recouped since Covid. Feds Bullard yesterday said that there are 2.5 million retired workers who are not likely to return to the workforce. 

On the other side of the coin, there haven’t been the normal gains of employment typically seen over time since the start of Covid. So one can argue that 5– 6 million is actually higher (if 200K is normal x 18 months = 3.6M jobs normally added)

Will those collecting the emergency unemployment suddenly reenter the workforce? 

Will parents returned to work once children return to school? 

What will the impact of the Delta variant be?  Do people stop going to restaurants, events?  

Does the increased immunizations and recovered infected tilt toward herd immunity?  

The Fed chair is willing to wait it out given those uncertainties and the employment situation, while other Fed officials clearly are not and ready to go.

PS Stocks remain elevated

PSS Crude oil is still up about $1.00 on the day at $68.60

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