Home ForexForecasts USD/CAD: Canadian Dollar Falls Ahead of Canada and US Labor Reports

USD/CAD: Canadian Dollar Falls Ahead of Canada and US Labor Reports

by SuperiorInvest

The Canadian dollar fell slightly on Friday. In the European session it is trading at 1.3559, 0.12% higher.

Canada and the US will release employment data later today, which could mean some USD/CAD volatility in the North American session.

Employment in Canada is expected to fall to 25,000 in March, a significant decline from the increase of 40,700 in February. The labor market remains in good shape, but Canada's rapid population growth has raised the unemployment rate. The unemployment rate rose to 5.8% in February, up from 5.7% the previous month, and is expected to rise again to 5.9% in March.

US nonfarm payrolls expected to fall

Markets are bracing for a sharp drop in US nonfarm payrolls in March. Job growth reached 353,000 in January, but then fell to 275,000 in February and the market estimate for March is 200,000. The labor market has held up well in the face of high interest rates, but another drop in March data would indicate a clear downward trend in employment growth, which would support the Federal Reserve in deciding to lower interest rates earlier than later.

All eyes are on the Federal Reserve in anticipation of a rate cut later this year, but the Fed's messaging this week has been mixed. Federal Reserve Chairman Jerome Powell said that although inflation has been choppy, he expected the Fed to lower rates “sometime this year.” Cleveland Fed President Loretta Mester echoed this position, saying the Fed was increasingly confident it could lower rates in the coming months.

Contrast that stance with that of Minneapolis Federal Reserve President Neel Kashkari, who questioned whether rate cuts were necessary this year “if we continue to see inflation moving sideways.” Kashkari does not have a vote on monetary policy, but his comments indicate that a rate cut is not a done deal and will depend on data, particularly inflation.

USD/CAD Technical

  • USD/CAD tested the resistance at 1.3576 earlier. So the next resistance line is 1.3608.
  • 1.3527 and 1.3495 provide support

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