USD/JPY and USD/CAD Under Pressure After Weak US Labour Market Data

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The US jobs report for November, released yesterday, reinforced the downward momentum in the dollar. The Department of Labor reported that non-farm payrolls rose by just 64,000, only slightly above analysts’ expectations and signalling a fragile recovery in the labour market. At the same time, the unemployment rate climbed to 4.6%, exceeding both forecasts and previous readings, while October data will not be published due to a disruption in statistical collection following the shutdown. Weak US retail sales in October, which were flat instead of rising as expected, add to the picture of economic cooling and further weigh on the dollar.

Against this backdrop, the US currency weakened noticeably against major peers, including the Japanese yen and the Canadian dollar. USD/JPY traded below the key 155.00 level yesterday, reflecting yen strength amid deteriorating US economic prospects and increased demand for safe-haven assets. USD/CAD also moved lower and is trading below 1.3800, as the Canadian dollar draws support from improved sentiment towards Canada’s economy and ongoing pressure on the greenback.

USD/JPY

Downward pressure in USD/JPY persists following the formation of bearish “engulfing” and “dark cloud cover” patterns on the daily chart. However, sellers are currently encountering a key zone at 154.00–154.40, which has repeatedly acted as both support and resistance. A renewed rebound from this area could trigger a corrective move towards 155.30–156.00, while a sustained break below 154.00 would likely reinforce the broader downtrend.

Key events for USD/JPY:

  • Today at 15:00 (GMT+3): US MBA Mortgage Applications Index
  • Today at 16:15 (GMT+3): Speech by Fed’s Christopher Waller
  • Tomorrow at 02:50 (GMT+3): Foreign investment in Japanese equities

USD/CAD

The USD/CAD pair has been falling for a third consecutive week. Within the current downtrend, technical analysis suggests scope for a short-term corrective rebound, provided the price remains above this year’s September low at 1.3730. A decisive break below this support could open the way for fresh annual lows.

Key events for USD/CAD:

  • Today at 16:30 (GMT+3): Foreign investment in Canadian securities
  • Today at 18:30 (GMT+3): US crude oil inventories
  • Tomorrow at 16:30 (GMT+3): Average weekly earnings in Canada