Canadian Dollar falls despite solid jobs data as US NFP beat forecasts

• US Nonfarm Payrolls increased by 172K in May, beating expectations of 85K.
• Canada's economy added 87.8K jobs while the unemployment rate fell to 6.6% in May.
• WTI crude eased toward $91.00, reducing commodity support for the Canadian Dollar.

The USD/CAD pair rises and trades near the 1.3930 region on Friday as the US Dollar (USD) gains ground following a stronger-than-expected Nonfarm Payrolls (NFP) report, offsetting support from an equally impressive Canadian employment release. At the time of writing, the pair trades at 1.3935, up 0.20 on the day after hitting a daily low of 1.3866 ahead of the release of the NFP report.

The US Bureau of Labor Statistics (BLS) reported that the US economy added 172K jobs in May, well above the 85K expected by markets and following an upwardly revised gain of 179K in April. Meanwhile, the Unemployment Rate held steady at 4.3%, while annual wage growth eased to 3.4% from 3.6%, suggesting the labor market remains resilient without generating additional wage inflation pressures.

On the Canadian side, employment surged by 87.8K jobs in May, far exceeding expectations for a modest increase, while the unemployment rate unexpectedly declined to 6.6% from 6.9%. The gains were concentrated in full-time positions, highlighting resilience in Canada's labor market despite ongoing concerns surrounding trade uncertainty and economic growth. However, the stronger US employment figures ultimately provided greater support to the Greenback.

Additional pressure on the Canadian Dollar (CAD) came from the commodity side, as the Loonie is closely tied to crude Oil prices, with energy exports a major contributor to Canada's economy and trade balance.

On Friday, West Texas Intermediate (WTI) crude traded on the back foot near $91.00 per barrel, limiting support for the CAD and helping keep USD/CAD underpinned despite the upbeat domestic jobs data.

Short-term technical analysis:

On the 4-hour chart, USD/CAD trades at 1.3934, maintaining a bullish near-term bias as it holds above both the 20-period and 100-period Simple Moving Averages (SMAs) at 1.3880 and 1.3804, respectively. The pair is pressing a nearby horizontal barrier at 1.3936, while the Relative Strength Index (RSI) around 68 hints at firm but increasingly stretched upside momentum that could slow fresh gains if buyers fail to clear this ceiling decisively.

On the downside, initial support emerges at 1.3890, reinforced by the 20-period SMA and nearby horizontal levels clustered around 1.3880–1.3879, ahead of deeper demand at the 100-period SMA near 1.3804. On the topside, a clean break above the immediate resistance at 1.3936 would open the door to an extension of the advance, with the bullish structure likely to persist while price holds above the aforementioned support band.

(The technical analysis of this story was written with the help of an AI tool.)