The Canadian dollar is trading quietly in the European session. Currently, USD/CAD is trading at 1.2518, down 0.09%.
Canada releases key employment data later in the day (12:30 GMT). Canadian dollar bulls are hoping for a strong outing from Employment Change. It has been a rough week for the Canadian dollar, with USD/CAD climbing 1.57%. On Thursday, the pair climbed to 1.2590, its highest level since April 21. The Canadian dollar, which is sensitive to commodity prices, has been hurt by the drop in oil prices this week. With the OPEC+ group failing to reach an agreement, there are concerns that producers will sharply increase production come April of next year, when the current deal expires.
Canada job data expected to improve
Canada’s labour market is expected to have rebounded in June, after shedding 68 thousand jobs in May. The consensus for June is a strong gain of 195 thousand. If the actual reading is within expectations, we could see investors give a thumbs-up and send the Canadian dollar upwards. The unemployment rate is projected to fall to 7.7% in June, down sharply from the previous read of 8.2%.
Investors are still scratching their heads after the FOMC minutes were released on Wednesday. There was speculation that the Fed might sound hawkish, after surprising the markets in June when it said it anticipated raising rates twice in 2023. However, the minutes did not provide any clues as to the timeline for a taper in the Fed’s bond-buying programme. Some members argued in favor of a taper, citing the strong recovery and the jump in inflation. Still, the prevailing view was that it was premature to make any shift in policy, and the market appears to agree with the Fed that inflation levels will ease.
- USD/CAD is testing resistance at 1.2517. Above, there is resistance at 1.2585 which was tested on Thursday
- On the downside, there is support at 1.2261. Below, there is support at 1.2193