If economic news is the ultimate test of the strength of a market, then how do you make sense of the Canadian dollar?

The botched jobs report was a rare chance for a market to respond to both good and bad news. Let’s recap:

When the first report came out and showed the country creating only 200 jobs, USD/CAD jumped higher but couldn’t get through 1.1000. In fact, it couldn’t break the high of 1.0986 from earlier in the week and created a double top. The target of that pattern is just below 1.0825.

Yet you think that target would have been reached when the employment report was re-released and showed a 41.7K gain but it didn’t happen. The pair was essentially flat after the report and is down only modestly today.

Where does that leave us now?

USDCAD daily chart

USDCAD daily

I still like the downside and here’s why: A retracement is getting tougher but the momentum is still lower. Today the 100-day moving average fell below the 200-dma for the first time since March 2013 — a death cross. The market sensed better revision to the jobs report so the fall from 1.0950 showed that and it confusion after the data led to some position squaring.

What’s the trigger for a decline in USD/CAD? Perhaps a soft US CPI report tomorrow snuffs out the chance of a hawkish comment from Yellen at Jackson Hole.