USD/CAD remains in a slightly range-bound area around the 1.3950 level in Friday’s Asian trading, as traders are wary of taking action ahead of Canada’s November employment data. The labour market figures, which are scheduled to be released later in the day, will likely prove to be the primary catalyst for the Canadian Dollar (Loonie) and provide further direction on how soon or when we might expect some fresh action by the Bank of Canada (BoC). The duo continues to trade within Thursday’s range until the results are published.
Weak Job Market Could Tilt BoC To Rate Cuts
Investors now await the Canadian employment report, which will give an idea of whether the economic weakness will drag the BoC towards more monetary easing. There are no jobs added forecast for October’s big 66.6K expansion, with unemployment seen moving higher to 7% from 6.9%. Post-disappointing NFP and employment numbers would heighten the prospects of a rate cut this coming Wednesday, adding to the downward pressure on the Canadian Dollar.
Expectations of the Fed Will Cut, USD Strength Limited and USD/CAD Defended
On the US side of things, DXY hits a fresh five-week low near 98.75 as market sentiment remains firm ahead of the expected Fed rate hike next week. Markets now price a 25 bps cut in December with an 87% probability, according to the CME FedWatch Tool. Deteriorating US labour conditions and expectations that tariff-induced inflation will ease are adding to a more cautious view. This sentiment is keeping the US dollar sentiment on the ropes and maintaining USD/CAD in a range, even as Canada’s economy grows hazy.
