The Canadian dollar is expected to show excellent performance this week although the Canadian employment data report published alongside the United States (US) NFP report last Friday, was somewhat mixed.
Canadian job growth for November was reported to be low at 10,100, barely matching expectations for a contraction from October's 108,300 figure. Meanwhile, the unemployment rate recorded a good decline to 5.1% from 5.2% the previous month, brushing aside expectations to increase at 5.3%.
Factors that will support the positive movement of the Canadian dollar this week are driven by global crude oil market sentiment.
First is the decision of the group of petroleum exporting countries (OPEC+) to maintain the measure of reducing oil supply by 2 million barrels per day until November next year.
The second is related to the movement restriction measures in China that are being eased after the pressure of protest activities carried out by the people of that country in the past weeks.
These factors are seen to support demand for crude oil in the market and the effect of rising oil prices will also increase the value of the Canadian dollar.
The price chart of the USD/CAD currency pair at the end of last week saw the price rebounding from the 1.34000 support level testing the 1.35000 level which became a resistance for the price when the jobs report was published.
However, the price fell again and the downward pattern continued at the opening of trading earlier this week in the Asian session.
In fact, the price drop has re-crossed the Moving Average 50 (MA50) support level on the 1-hour time frame on the USD/CAD chart which could be an early signal for a bearish trend move.
The 1.34000 support level was again tested but there was a weak bounce as trade entered the opening of the European session.
With the expectation that the Canadian dollar will move better against the US dollar, the price will continue to decline to reach the next target in the zone around 1.33000.
A further drop beyond the zone is seen to reach around 1.32000 which was previously a support zone for prices during last November's trading
On the other hand, if there is a rebound from the 1.34000 zone, the price is likely to test again last Friday's resistance at the 1.35000 level.
Next, the increase will continue to the resistance zone of last week when the increase was reached at a height of around 1.36400.
