USD/CAD drops to fresh multi-month lows below 1.24

• Unemployment rate in Canada drops to 5.7%.
• NFP from the U.S. disappoints.

The USD/CAD pair came under a heavy pressure following the employment data from the United States and Canada. After losing more than 100 pips in a matter of minutes, the pair refreshed its lowest level since since late September at 1.2368 and was last seen trading at 1.2378, losing 112 pips, 0.9% on the day.

Today's data from the United States showed that nonfarm payrolls increased by 148K in December and missed the market expectation of 190K. Despite the dismal NFP reading, the unemployment rate remained steady at 4.1%. Wage inflation measured by the average hourly earnings rose by 0.3% on a monthly basis in December and met the market consensus. The US Dollar Index quickly dropped to a fresh daily low at 91.50 with the initial reaction but recovered a portion of its losses to turn positive on the day. As of writing, the DXY was at 91.62, up 0.02% on the day.

On the other hand, following November's 79.5K increase, the net change in employment in Canada rose by 78.6K, pulling the unemployment rate to 5.7% from 5.9% and beating the market estimate of 6%. The upbeat data is likely to continue to fuel the loonie's rally as it ramps up the probability of the BoC hiking rates in 2018.

Technical levels to consider

The initial support for the pair aligns at 1.2300 (psychological level) ahead of 1.2230 (Sep. 20 low) and 1.2110 (Sep. 7 low). On the upside, resistances could be seen at 1.2500 (psychological level), 1.2550 (Jan. 3 high) and 1.2620 (100-DMA).