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USD/CAD Outlook: US and Canadian Jobs Data Push Buyers

  • The Canadian dollar fell to a two-week low on Friday.
  • Canada’s unemployment rate jumped from 6.4% to 6.5%, raising the chances of the Bank of Canada making further rate cuts.
  • The US economy added 142,000 jobs, below expectations of 160,000.

The USD/CAD outlook shows a bullish sentiment shift as investors weigh the US and Canada’s labor sectors. Reports on Friday showed the US labor market was not doing as badly as initially feared. On the other hand, Canada’s unemployment rate jumped, raising Bank of Canada rate cut expectations. 

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The Canadian dollar fell to a two-week low on Friday as domestic data pointed to more significant rate cuts in Canada. Canada’s economy added 22,100  jobs, missing forecasts of 23,700. At the same time, the unemployment rate jumped from 6.4% to 6.5%. The labor market is declining rapidly, which could push the Bank of Canada to consider more significant rate cuts. After the report, markets moved to price 63-bps of rate cuts to come.

Meanwhile, the US labor market was in slightly better shape. The economy added 142,000 jobs, below expectations of 160,000. Meanwhile, the unemployment rate eased to 4.2%, reducing fears of a recession. The last report had spooked investors, with the unemployment rate jumping to 4.3%. As a result, markets had increased bets on a 50-bps rate cut. However, with the latest figures, the Fed might prefer a 25 bps rate cut. 

Investors will focus on US consumer inflation data on Wednesday this week. Economists expect the headline figure to cool further from 2.9% to 2.6%, bringing price pressures closer to the Fed’s target.

USD/CAD key events today

The pair might start the weekly slowly, as neither the US nor Canada will release any major reports today. 

USD/CAD technical outlook: Price action supports more upside

USD/CAD technical outlook
USD/CAD 4-hour chart

On the technical side, the USD/CAD price is approaching the 1.3600 key resistance level. The price sits above the 30-SMA, and the RSI is near the overbought region, indicating a bullish bias. The trend recently reversed, with bears losing control at the 1.3450 support level.

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However, the price momentarily dipped below the SMA after bulls took charge. Price action here showed that bullish momentum was stronger. The price made a doji candlestick pattern before making a large bullish candle. Consequently, USD/CAD might soon break above 1.3600.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.