Last Friday, the Bureau of Labour Statistics in the US published the October Non-Farm Payrolls report, in which it was revealed that headline unemployment had decreased even more than initially expected.
According to the findings of the report, overall unemployment had sunk to 6.9 per cent over the previous month from September's 7.9 per cent. This is a considerably bigger depreciation compared to the projections for a smaller slide to 7.7 per cent.
As can be seen from the graph above, Friday's improvement marks the sixth consecutive reduction of headline unemployment since the massive upsurge in April owing to the outbreak of the coronavirus pandemic.
The American labour market is exhibiting resilience despite the uptick in COVID-19 cases in the States and elsewhere, which underpins the effectiveness of FED's accommodative monetary policy.
Nevertheless, the ongoing strengthening of the labour market could be jeopardised by likely disruptions in the underlying dynamics between monetary policy and fiscal policy.
President Donald Trump had previously used stimulus relief as a bargaining chip in the presidential race but since he lost the elections, it remains to be seen whether his administration would live up to the promise and pass the highly anticipated stimulus package bill. It is crucially important for FP and MP to work in concert with each other so that the robustness of the recovery process can be preserved.
The uncertainty stemming from the temporarily adjourned issue of FP is a cause of concern in Washington, as Donald Trump might yet decide to use it to stymie growth and leverage his position against President-elect Joe Biden.
That is why the outcome of the elections did not immediately resolve all outstanding questions, and the value of the dollar continues to be strained by persisting uncertainties.
As can be seen on the 4H chart below, the USDCAD pair quite expectedly rebounded from the Test Area (in blue) and is currently consolidating below the last remaining support level at 1.30450.
The struggles for the greenback are exacerbated by the prevailing bearish momentum, as demonstrated by the MACD indicator. It remains to be seen whether the recent breakdown below the above-mentioned support is going to be followed by continued depreciation of the price action, or by an immediate pullback above the support.