USD/CAD Eases on Quit Rate Decline

The dollar eased against the Loonie on Tuesday but finished well off the session lows. Treasury yields were mixed as the interest rate curve steepened. According to the US Labor Department, Jobs openings declined slightly but still remain just shy of 11-million. Inflation remains in the Manufacturing Sector. The ISM survey showed a record level prices-paid sub-index.

Technical Analysis

The USD/CAD moved lower but bounced near support. The exchange rate tested the 10-day moving average at 1.2642 and bounced. Resistance is seen near the 50-day moving average at 1.2711. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The exchange rate has moved out of overbought territory which also reflects accelerating negative momentum. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in positive territory with an upward sloping trajectory which points to a higher exchange rate.

The Quit Rate Declined

According to the US Labor Department, the quits level, which had soared to record highs in recent months, slowed to 4.34 million, a decrease of 3.6%, while the quits rate edged down 0.1 percentage point to 2.9%. In a separate report, the ISM said that manufacturing activity in the United States declined in January from December but was higher than expectations. According to the Institute of Supply Management, manufacturing slipped to 57.8 in January, below the 58.8 index level reported in December. Expectations were for a larger decline to 57.4.