The USD/CAD pair shows upward trading dynamics for the second week in a row and has reached annual highs in the 1.3755 area amid market participants' expectations of further tightening monetary stimulus by the US Federal Reserve.
Published on Friday, strong data from the US labor market recorded an increase in employment by 263.0K and wages of 5.0% YoY, as well as a decrease in unemployment to 3.5%. Positive statistics once again underscored that the sector is successfully resisting the targeted adjustment of parameters by the financial authorities. If inflation statistics for September, which will be presented this week, confirm the continuation of high dynamics, the US Federal Reserve is likely to continue the hawkish rate, raising the interest rate by another 75.0 basis points, which will entail further strengthening of the US currency.
The state of the Canadian economy currently looks stable. However, the American monetary policy factor still prevails in investors' calculations and does not allow the national currency to strengthen its position in the market. Nevertheless, it should be taken into account that PMI remains high (the September index decreased slightly, reaching 59.5 points), employment is growing (by 21.1K in September), and unemployment has adjusted to 5.2%. Also, the decision of OPEC+ to reduce oil production by 2.0M barrels per day will have positive consequences for the Canadian economy, which should lead to an increase in the oil price, which is a serious item of national export.
The trading instrument rose above 1.3793 (Murrey [+1/8]), signaling further upward dynamics towards 1.4038 (Murrey [+2/8], H4) and 1.4160 (Murrey [+2/8], W1). Consolidation below 1.3550 (Murrey [7/8], the middle line of Bollinger bands) may lead to a decline to the area of 1.3305 (Murrey [5/8]), 1.3183 (Murrey [4/8]).
At the moment, Bollinger bands and Stochastic are directed upwards, confirming the continuation of the uptrend, and the MACD histogram is stable in the positive zone.
Resistance levels: 1.4038, 1.4160. | Support levels: 1.3550, 1.3305, 1.3183.