The Canadian dollar is showing little movement on Friday. In the European session, USD/CAD is trading at 1.3931 at the time of writing, down 0.02%. We could see some volatility from the Canadian dollar later in the day, with the release of the US employment report.

US nonfarm payrolls expected to sink to 4-year low

The US releases the October employment report later today and nonfarm payrolls are expected to fall sharply to 113 thousand, compared to 254 thousand in September. The expected slide is due to one-time events which likely dampened job growth in October, namely, hurricanes and the strike at Boeing. If the market estimate is accurate, this will be the lowest nonfarm payrolls since December 2020.

Soft payrolls have spooked the markets in the past, but if investors look beyond the jobs numbers they will see that the labor market remains solid. The unemployment rate is expected to remain unchanged at 4.1% and wage growth is projected to rise 0.3% m/m and 4% y/y, little changed from September.

Canada’s GDP was flat in August but is estimated to have expanded by 0.3% in September. The weak August reading was affected by lockouts in the railway industry and summer wildfires.

The Bank of Canada has been aggressive in its rate-cutting cycle with four cuts this year, including a jumbo 50-basis point cut last week. The soft August GDP bolsters the case for another 50-basis point cut at the December meeting, but much will depend on inflation and employment reports for October which will be released ahead of the meeting. As was the case at last week’s meeting, BoC policymakers will have to decide whether to hike rates by 25 or 50 basis points.

USD/CAD Technical

  • USD/CAD tested support earlier at 1.3923. Below, there is support at 1.3902
  • There is resistance at 1.3956 and 1.3977

 

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at [email protected]. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.