USD/CAD is almost unchanged in the Friday session. Early in North American trade, the pair is trading at 1.3314, up 0.4% on the day. On the release front, there are no U.S. events. Canada will release employment numbers. Employment change is expected to post modest gains of 6.5 thousand and the unemployment rate is projected to edge up to 5.7%.
It’s been a rough week for the Canadian dollar, which has slipped 1.6%. Will the slide continue? Investors are increasingly concerned that the U.S and China will not be able to reach a trade deal. On Thursday, President Trump said that he had no plans to meet with Chinese President Xi before March 2, when further U.S. tariffs are scheduled to be imposed against China. This has raised concerns that a trade deal will not be reached prior to the March 2 deadline. Trump’s remarks chilled risk appetite, sending U.S. equity markets and the Canadian dollar lower.
The Bank of Canada appears to have taken page out of the Federal Reserve’s playbook, and is expected to ease monetary policy this year after aggressively raising rates in 2018. On Wednesday, BoC Deputy Governor Tim Lane said that Canada’s fundamentals were strong and unemployment was at historically-low rates. However, Lane noted that the Canadian dollar was under pressure due to lower oil prices, a soft housing market and a decline in business investment due to uncertainty over U.S. trade policies.
