- The number of individuals filing new applications for unemployment benefits in the US unexpectedly declined last week.
- US producer prices increased in January at the quickest rate in seven months.
- Canada’s labor market is still too tight, and the economy is too hot.
On Friday, USD/CAD price analysis shows a strong bullish bias as the Greenback rocketed to a six-week high against major currencies. Investors anticipated further interest rate increases due to positive US economic data.
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The number of individuals filing new applications for unemployment benefits in the US unexpectedly declined last week, according to figures made public on Thursday. According to additional data, producer prices increased on a monthly basis in January at the quickest rate in seven months.
The Bank of Canada governor, Tiff Macklem, warned on Thursday that the labor market is still too tight and the economy is too hot. He left the door open to further interest rate increases.
The Bank increased its benchmark interest rate to 4.5% on January 25, the highest level in 15 years. It was the first major central bank to announce that it would postpone additional hikes if prices declined as predicted.
The bank predicts that from 6.3% in December, inflation will drop to roughly 3% by the middle of the year and then to its objective of 2% by 2024.
Macklem reaffirmed the bank’s policy position while acknowledging the effects of the positive January jobs report from the previous week.
Canada significantly exceeded estimates in January, adding 150,000 new jobs.
The bank predicted last month that the economy would stagnate throughout the first three quarters of this year and might enter a recession, but the jobs report revealed that demand is still strong.
USD/CAD key events today
Investors are not expecting any significant news releases from Canada or the US, so the price will likely consolidate.
USD/CAD technical price analysis: Buyers cross the 1.3500 key psychological level
The 4-hour chart shows USD/CAD trading far above the 30-SMA and the RSI in the overbought region. Bulls are much stronger than bears and have managed to break above the 1.3450 resistance level that had stopped them on many previous occasions.
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Bulls are currently attempting to break above the 1.3500 resistance, which might pause the climb. A close above this level would solidify the bullish move and probably lead to higher prices.
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Saqib Iqbal
