USD/CAD Price Forecast – Canadian Dollar Moves Higher Ahead Of The Weekend

Key Insights

• Canada’s Employment Change report missed analyst expectations but had no material impact on USD/CAD dynamics. 

• WTI oil gained some ground ahead of the weekend, providing some support to the Canadian currency. 

• Next week, USD/CAD traders will be focused on the BoC Interest Rate Decision.

Canadian Dollar Gains Ground Against U.S. Dollar

USD/CAD declined below 1.3000 and is trying to settle below 1.2950 after the release of job market data in Canada and U.S.

Canada’s Employment Change report indicated that the economy lost 43,200 jobs in June. Analysts expected that employment would grow by 23,500. Unemployment Rate declined from 5.1% in May to 4.9% in June, while Participation Rate decreased from 65.3% to 64.9%.

The decline in Participation Rate pushed Unemployment Rate to lower levels despite the decline in the number of jobs. It should be noted that Canada’s Participation Rate has started to trend lower, which is not a good sign for the economy.

In the U.S., Non Farm Payrolls report exceeded analyst expectations, providing some support to the American currency. However, this support was not sufficient enough to push USD/CAD higher. Meanwhile, WTI oil gained some ground ahead of the weekend, which was bullish for the Canadian currency.

What’s Next For USD/CAD?

Next week, traders will focus on the BoC Interest Rate Decision, which will be released on Wednesday. Analysts expect that BoC will raise the rate from 1.5% to 2.25%. The Fed is also expected to raise the rate by 75 bps on July 27.

Expectations of an aggressive rate hike from BoC provide some support to the Canadian dollar. Strong oil markets also serve as a bullish catalyst for the Canadian currency. Meanwhile, demand for the U.S. dollar stays strong thanks to the robust demand for safe-haven assets.

As a result, USD/CAD remains stuck in the 1.2850 – 1.3050 range. Most likely, USD/CAD will need additional catalysts to move out of this range.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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