The Canadian dollar is showing limited movement for third consecutive day. In the European session, USD/CAD is trading at 1.4328, up 0.14% on the day.
The week wraps up with January employment reports from both Canada and the US, which could mean USD/CAD will be active in the North American session. Canada and the US are coming off sparkling job growth numbers in December and it will be interesting to see how the market reacts to the January data, which is expected to be much lower.
Employment in Canada climbed 91 thousand in December, a blowout reading which was the largest gain since Jan. 2023. It was the fourth straight monthly increase and that trend is expected to continue, with a market estimate of 25 thousand for January. The unemployment rate is expected to rise to 6.9%, up from 6.7% in December. This would be the highest unemployment rate since Sep. 2021 and would support the case for further rate- cutting from the Bank of Canada.
US nonfarm payrolls expected to drop
The US wraps up the week with nonfarm payrolls, one of the most important economic events. The market estimate stands at 170 thousand for January, after a surprisingly strong gain of 256 thousand in December. If the January forecast is accurate, it would mark a sharp drop that would make headlines, but it would not be far off the past three-month average.
The Federal Reserve is unlikely to show much concern if job creation slows, as long as the labor market is cooling at a slow pace. The Fed is expected to cut rates only once or twice this year, but that could change if inflation or the labor market provide any surprises.
USD/CAD Technical
- USD/CAD is testing resistance at 1.4324. Above, there is resistance at 1.4348
- There is support at 1.4282 and 1.4258
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