US dollar weakness accelerates after disappointing nonfarm payroll data

The US dollar decline continued today as the risk-on sentiment in the market continued. The currency has declined against the most developed world and emerging market currencies as risks to the global economy fell. For example, countries are still evaluating a Covid vaccine and there is a possibility that Joe Biden will embrace diplomacy when dealing with America’s allies like Germany and foes like China. In a report today, the Bureau of Labour Statistics said that the American economy added more than 245,000 jobs in November, lower than the previous month’s 638,000. The unemployment rate fell to 6.7% while the participation rate fell to 61.7%.

The Canadian dollar rose today as traders reacted to the relatively higher crude oil prices and the country’s employment numbers. The price of oil rallied in reaction to the consensus between OPEC and its allies about supply cuts. After a few days of debate, the members agreed to gradually increase production by about 500,000 per day. That was the middle ground considering that Saudi Arabia and Russia wanted to retain the existing cuts. Meanwhile, data by the Canadian statistics office showed that the economy created more than 62,000 jobs in November while the unemployment rate fell to 8.5%.

The British pound wavered as traders waited for more statements on Brexit. In the past few days, there have been different statements made about progress during the talks. For example, early this week, Bloomberg reported that the talks between the two sides were almost winding-down after a series of concessions. But then yesterday, France threatened to veto any deal that placed its fishing industry at risk. Therefore, any statements today or during the weekend will possibly have a major impact on the sterling. Separately, data from Markit showed that the construction PMI increased from 53.1 in October to 54.7, which is further evidence of the strength of the housing sector.

USD/CHF

The USD/CHF pair crashed to an intraday low of 0.8900, which is the lowest it has been since January 2015. On the four-hour chart, the pair has managed to move below the important supports at 0.9027 and 0.8983. It is also between the middle and lower lines of the Bollinger Bands while the Relative Strength Index (RSI) has moved to the oversold level. Therefore, the pair’s path of least resistance is still lower.

EUR/CAD

The EUR/CAD pair bounced back and reached an intraday high of 1.5661, which is the highest it has been since yesterday. The hourly chart shows that the pair is attempting to move to the highest level yesterday. It is also above the yellow ascending trendline and the 14-day and 28-day simple moving averages. The average directional movement index has also risen to 30. Therefore, the pair is likely to end the American session at the current level. 

EUR/USD

The EUR/USD pair rallied and reached an intraday high of 1.2170, which is the highest it has been since 2018. On the daily chart, the price is still above the short- and longer-term moving averages while the average directional index has soared to above 45. Also, the Relative Strength Index (RSI) has moved to the highest level since July this year. Therefore, the path of least resistance for the pair is to the upside.