USD/CAD peeps above 1.26 on upbeat US wage growth, trade data

USD/CAD jumped to a session high of 1.2615 after the data released in the US showed the wage growth ticked higher to 0.3% m/m in July as expected, while the trade deficit in June narrowed more than expected to $43.6 billion. 

The non-farm payrolls data showed the economy added 209K jobs in July, beating the estimated figure of 180K. The jobless rate dropped to 4.3% as expected, while the labor force participation rate ticked higher to 62.9% from 62.8%. 

Across the borders, StatCan data showed the Canadian economy added 10.9K jobs in July vs. 10K expected. The previous month’s figure stands unrevised at 45.3K. The jobless rate came-in at 6.3%, which is well below the 6.5% reading registered in June. The Canadian trade deficit widened to $3.6 billion in June. 

The data sets on both sides of the border are evenly matched except for the trade deficit front, where US has an upper hand, given the bigger than expected drop in the trade deficit. 
Still, the spread between the Canada 10-yr bond yield and the US 10-yr bond yield has remained largely around the pre-data level of 32 basis points. Consequently, the USD/CAD pair has trimmed gains to trade just below 1.26 handle.  

USD/CAD Technical Levels

A breach of support at 1.2518 [10-DMA + 1-hour 200-MA] would open doors for a sell-off to 1.2451 [Aug low on the 4-hour chart] and 1.2413 [July 6 low]. On the higher side, breach of resistance at 1.2618 [Aug high] would open up upside towards 1.27 [zero figure] and 1.2739 [23.6% Fib R of 1.3793-1.2413].