USD/CAD is unchanged in the Thursday session. Currently, the pair is trading at 1.3588, up 0.03% on the day. In the U.S., the focus will be on employment numbers for the remainder of the week. ADP nonfarm payrolls are expected to remain unchanged at 179 thousand, while unemployment claims are forecast to continue climbing, with an estimate of 220 thousand. On Friday, the U.S. will post nonfarm payrolls and wage growth, and Canada publishes employment change and the unemployment rate. As well, ISM Manufacturing PMI is forecast to dip to 57.7 points.
The Canadian dollar endured a rough December, and it’s doubtful if January will bring much relief. Turmoil on global stock markets has soured risk appetite and made minor currencies like the Canadian dollar less attractive. The volatility in U.S. markets was especially pronounced last week, as stocks plunged but then rebounded. There is widespread concern that the global trade war will continue to take a bite out of the global economy, which could mean more headwinds for the Canadian dollar, a commodity currency.
After four rate hikes in 2018, the Federal Reserve will be drastically easing up on raising rates in 2019. Just a few months ago, there was heady talk of three or four rate hikes in 2019, but the Fed made an abrupt U-turn, saying the “neutral rate range” had been reached. Analysts expect one rate hike in 2019, as this year’s hikes and the global trade war have lessened the pace of expansion in the U.S. economy. According to the CME Group, the likelihood that the Fed will stay on the sidelines in January and March stands at 98% and 93%, respectively. This dovish stance from the Fed could weigh on the dollar in the coming months.
