The USDCAD pair slumped on Thursday and will look to a double release of jobs numbers for the Canadian and US economies.
USDCAD – Daily Chart
USDCAD trades at 1.3753 after finding resistance above the 1.38 level. A potential follow-through could see the pair move toward 1.35.
Canada’s employment number is expected to show an additional 22.5k jobs but comes after last month’s stronger 63.8k. Unemployment is also expected to rise to 5.6% from 5.5%, and any upside change to those numbers could boost the Canadian dollar.
The US employment situation is better, with an unemployment rate of 3.8% and an expected 180k jobs added. Canada’s currency was also boosted by oil and other commodities . Oil prices rose 3% on Thursday before giving up some of those gains.
The US dollar also suffered after the Federal Reserve’s latest interest rate announcement.
“The question we’re asking is: Should we hike more?” Chair Jerome Powell told reporters during the press briefing.
“Slowing down is giving us, I think, a better sense of how much more we need to do, if we need to do more”.
Many investors are sure that the bank’s tightening cycle is at an end, and the elevated levels of the 10-year yield have added to the tighter financing environment.
“The Fed is saying: We don’t think we will have to do much more from here,” said Bill Dudley, former NY Fed President. He added that the central bank feels confident that they have done a lot to tackle inflation.
The US economy has remained resilient, and inflation has dropped, so the bank is looking to pause and consider the potential for trouble overseas, with a potential increase in crude oil , reversing current trends.
Traders should focus on the jobs data on Friday, which could see further gains for the Canadian dollar if there is a positive swing in trend or if the US market deteriorates.
