- The Canadian dollar extends a third day of gains against the greenback.
- Canada did not release economic data on Thursday.
- US markets are also closed for Independence Day leaving trading volumes low.
The Canadian Dollar (CAD) rose for a third straight day of gains against the US Dollar as Thursday’s markets moved quietly along. The lack of notable data has left both the CAD and the USD adrift, giving market participants pause ahead of the release of Friday’s US Non-Farm Payrolls (NFP) data.
Canada and the US are absent from the economic calendar on Thursday. US markets are closed for the Independence Day holiday, while Canada has nothing useful to say. Friday is expected to be a volatile close to the trading week, with the US NFP completely overshadowing the Canadian jobs figures.
Market Movers: Canadian Dollar Eases on Further Gains on Quiet Thursday
- Market focus will shift to Friday amid a flat Canadian publishing calendar and the US holiday.
- Canada’s net employment change in June is expected to narrow to 22,500 from 26,700 previously.
- Canada’s unemployment rate is projected to rise to 6.3% from 6.2%.
- Canada’s annualized Average Hourly Earnings for the year ending in June will also be released. Canadian wages posted year-over-year growth of 5.2% in the latest release.
- US NFP net job gains are forecast to narrow to 190,000 in June from 272,000 previously.
- Average Hourly Earnings in the US are also expected to moderate further, with a forecast decline to 0.3% monthly in June from 0.4% previously.
Canadian Dollar PRICE Today
The table below shows the exchange rate of the Canadian Dollar (CAD) against major currencies today. Canadian Dollar was the strongest currency against the US Dollar
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.21% | -0.14% | -0.35% | -0.21% | -0.33% | -0.29% | -0.18% | |
| EUR | 0.21% | 0.08% | -0.10% | 0.00% | -0.09% | -0.07% | 0.08% | |
| GBP | 0.14% | -0.08% | -0.21% | -0.07% | -0.18% | -0.15% | -0.05% | |
| JPY | 0.35% | 0.10% | 0.21% | 0.14% | 0.02% | 0.06% | 0.16% | |
| CAD | 0.21% | -0.01% | 0.07% | -0.14% | -0.11% | -0.05% | 0.02% | |
| AUD | 0.33% | 0.09% | 0.18% | -0.02% | 0.11% | 0.06% | 0.14% | |
| NZD | 0.29% | 0.07% | 0.15% | -0.06% | 0.05% | -0.06% | 0.08% | |
| CHF | 0.18% | -0.08% | 0.05% | -0.16% | -0.02% | -0.14% | -0.08% |
The heatmap shows percentage changes of major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change shown in the chart will represent the CAD (base)/USD (quote).
Technical analysis: Canadian dollar regains more ground against the US dollar
The Canadian Dollar (CAD) is rising moderately on Thursday, climbing around a fifth of a percent against the US Dollar (USD). The CAD also gained a scant tenth of a percent against the British Pound (GBP) and Swiss Franc (CHF), but lost around the same against the recovering Japanese Yen (JPY).
The USD/CAD is turning lower, moving away from Thursday’s early bid highs around 1.3640, heading towards the 1.3600 zone. A clean downside break of 1.3600 sets the pair up for a fresh challenge of the 200-day exponential moving average (EMA) at 1.3588. The daily candles have accumulated a significant amount of bearish pressure from a bid zone situated above 1.2750, and USD/CAD bids are being squeezed in a high pressure zone just above the long-term moving averages.
USD/CAD Hourly Chart
USD/CAD daily chart
Nonfarm Payrolls
Nonfarm payrolls (NFP) are part of the U.S. Bureau of Labor Statistics’ monthly employment report. The nonfarm payrolls component specifically measures the change in the number of people employed in the U.S. over the previous month, excluding the agricultural sector.
The nonfarm payrolls figure can influence Federal Reserve decisions by providing a measure of how successfully the Fed is fulfilling its mandate of promoting full employment and 2% inflation.
A relatively high nonfarm payrolls figure means that more people are employed, earning more money and therefore likely spending more. Conversely, a relatively low nonfarm payrolls figure could mean that people are having difficulty finding work.
The Federal Reserve typically raises interest rates to combat high inflation caused by low unemployment, and lowers them to stimulate a stagnant labor market.
Nonfarm payrolls tend to have a positive correlation with the US Dollar. This means that when payrolls figures are higher than expected, the Dollar tends to rise and vice versa when they are lower.
The NFP influences the US Dollar through its impact on inflation, monetary policy expectations, and interest rates. A higher NFP typically means that the Federal Reserve will be tighter in its monetary policy, which supports the USD.
Non-farm payrolls typically have a negative correlation with the price of Gold. This means that a higher than expected payrolls figure will have a depressive effect on the price of Gold and vice versa.
A higher NFP usually has a positive effect on the value of the USD, and like most major commodities, Gold is priced in US Dollars. Therefore, if the USD gains value, fewer Dollars are needed to buy an ounce of Gold.
Moreover, higher interest rates (usually helped by a higher NFP) also reduce the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm payrolls are just one component within a larger employment report and can be overshadowed by the other components.
Sometimes, when nonfarm payrolls beat forecasts but average weekly earnings were lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the drop in earnings as deflationary.
The Participation Rate and Average Weekly Hours components can also influence market reaction, but only in rare cases, such as during the “Great Resignation” or the Global Financial Crisis.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
