USDCAD has been trending higher on its long-term time frames, moving inside an ascending channel that has held for the most part of 2016.

Price is currently testing the channel support and could be due for a bounce as a spinning top candle has formed. 

The next daily candle should serve as confirmation for this potential reversal, and the moving averages are hinting that the uptrend could carry on. The 100 SMA is above the longer-term 200 SMA and is in line with the channel support, adding to its strength as a floor. 

Stochastic is heading south to suggest that there’s a bit of selling pressure left but the oscillator is dipping into the oversold area to show that bearish momentum is exhausted. Once it crosses higher, bulls could get back in the game and allow the next candle to close past the previous candle high around 1.3270. 

US NFP data came in below expectations last Friday, with the economy adding only 156K positions versus the projected 175K increase. On a less downbeat note, the previous reading was upgraded to show a 205K gain in hiring for November while average hourly earnings rose by 0.4% versus the 0.3% consensus. The unemployment rate rose to 4.7% as expected on higher labor force participation. 

Canada printed a stronger than expected increase in hiring of 53.7K instead of the estimated 5.1K decline while its jobless rate rose to 6.9% as expected. The country’s trade balance beat expectations with a surplus of 0.5B CAD versus the estimated deficit of 1.6B CAD. 

Only the labor market conditions index is lined up from the US economy today and an improvement could remind traders that the Fed is looking to hike rates thrice this year. Meanwhile, Canada has the BOC Business Outlook Survey due. The Loonie could take its cue from oil price movements as well. 

By Kate Curtis from Trader’s Way