Home ForexForecasts USD/CAD – Bounce running out ahead of Canadian jobs data

USD/CAD – Bounce running out ahead of Canadian jobs data

by SuperiorInvest
  • US jobless claims no longer trending downward
  • Canadian unemployment expected to rise again
  • USD/CAD Exhausting Due to Momentum Near Key Resistance

The country has been performing well recently, boosted by some strong US economic numbers that have forced traders to scale back expectations for rate cuts.

Markets ended last year expecting 150 basis points of rate cuts from the Federal Reserve this year and, despite briefly rising to 175, have now moved closer to 125. While it is still likely to fluctuate further before For the central bank to begin the easing process, that marks a significant change that has boosted the dollar.

The current data on jobless claims doesn’t really change things either way. The trend appears to be bottoming, but at very low levels and that could continue to go lower again as it has before.

Canadian employment numbers will be the next focal point on Friday. The unemployment rate is expected to rise further in January to 5.9%, up from 5% less than a year ago.

This easing of labor market pressures may have contributed to lower inflation which, despite remaining above the BoC target, is heading in the right direction. Bank of Canada Governor Tiff Macklem suggested this week that there is still more to do and markets seem to agree, positioning themselves for a first rate cut in the summer.

Has the correction run out of momentum?

The recovery appears to have struggled in recent weeks near 1.3550, where it has repeatedly experienced resistance.

USD/CAD-Daily Chart

Source – OANDA

This falls around the 50% Fibonacci retracement level and within the 55/89 day simple moving average band. Now that the MACD is showing a divergence with price, what could be a correction may have run out of momentum. A move below the late January lows could further support this situation.

Original post

Source Link

Related Posts