USD/CAD extends weekly losses after Loonie outperforms on jobs data

• Canadian dollar outperformed on Friday boosted by data. 
• USD/CAD trimmed losses during US session, still ends more than 60 pips lower on Friday. 

The USD/CAD pair dropped sharply following US and Canadian employment data. It bottomed at 1.2353, the lowest level in three months. Afterward rebounded and trimmed losses. The recovery from the lows was capped by 1.2415 and it was about to end the week hovering around 1.2400. 

The loonie was the best performer on Friday among majors. The main driver was the Canadian jobs report. The net change in employment rose by 78.6K (significantly above the 2K expected) in December. The unemployment rate dropped to 5.7% (despite an increase in the participant rate). The numbers were so strong that increased Bank of Canada rate hike expectations. The momentum of the Loonie eased after the Ivey Purchasing Manager Index (PMI) showed a larger-than-expected decline in December to 60.0 from 63.0. 

In the US, the jobs report showed that non-farm payrolls increased by 148K in December, below market expectation of 190K. The unemployment rate remained at 4.1% while average hourly earnings rose by 0.3% in December in line with expectations. The greenback initially dropped but then recovered. The last economic report was the ISM Non-Manufacturing that came in at 55.9 below the 57.6 expected.

USD/CAD keeps falling 

The pair is about to post the third weekly decline in-a-row and the first close under the 20-week moving average since mid-October. It continues to retreat after being unable to break 1.2900 back in December.

The weekly chart shows the negative tone increasing. The pair needs to break the strong support around 1.2340/50 in order to clear the way to more losses. Below, not much support is seen until 1.2245 (Sep 9 & 15 high / Sep 22 low).  If the US dollar recovers on top of 1.2570/80 (20-WMA) it could remove the bearish bias.