USD/CAD spikes to 1.3470 area after employment data, quickly retreats below 1.3450

• Unemployment stays unchanged at 5.6% in Canada.
• NFP in December beats analysts' estimate by a wide margin.
• US Dollar Index advances to 96.50 area on upbeat employment data.

With the initial reaction to the employment data from both Canada and the United States, the USD/CAD pair jumped to 1.3473 but quickly reversed its course. As of writing, the pair was trading at 1.3445, losing 0.28% on a daily basis.

The monthly report published by the U.S. Bureau of Labor Statistics on Friday revealed that nonfarm payrolls increased by 312K in December and surpassed the experts' forecast of 177K. Additionally, the annual wage inflation as measured by the average hourly earnings rose 3.2% in December to beat the market expectation of 3%. Boosted by the data, the US Dollar Index gained traction and was last up 0.22% on the day at 96.50. Markets are now waiting for the FOMC Chairman Powell's speech, which is scheduled to start at 15:15 GMT.

Despite the USD rally, however, the pair remained under pressure as the loonie preserved its strength with the Canadian unemployment rate staying unchanged at 5.6% vs 5.7% expected. Additionally, a more-than-3% increase in crude oil prices gives an additional support t the commodity-related CAD.

Technical levels to watch for