- USD/CAD loses ground near 1.3580 amid US Dollar weakness.
- In the US, initial weekly jobless claims increased by 220,000 from 218,000 previously, while continuing claims fell from 1,925,000 to 1,861,000.
- The Bank of Canada held interest rates steady at its December meeting, while opening the door to further increases.
- U.S. nonfarm payrolls and unemployment rate data will be released on Friday.
The USD/CAD pair is trading negative during the early hours of the European session on Friday. The pair remains limited under the 50-day EMA barrier near 1.3600. At the time of writing, the pair is trading at 1.3577, down 0.14% on the day.
The president of the Federal Reserve (Fed), Jerome Powell, has indicated that the optimistic evolution of supply contributes to reducing inflationary pressures. This view is supported by a rebound in productivity growth in the third quarter of 2023, which translated into a substantial drop in unit labor costs. Markets believe that the Fed’s current tight monetary policies will compress demand and ensure the recent decline in inflation continues. Therefore, markets believe that the Fed has ended the cycle of interest rate hikes.
On Thursday, US data showed that initial jobless claims rose by 220,000 in the week ending December 2, up from 218,000 the week before, while continuing claims fell to 1,861. 000, compared to 1,925,000 the previous week. Markets will continue to monitor US employment data due on Friday.
As for the CAD, the Bank of Canada held interest rates steady at its December meeting, while opening the door to further hikes. The central bank stated that new signs that monetary policy is moderating spending and easing price pressures led it to maintain the interest rate at 5% and continue to normalize the financial balance. The BoC is concerned about risks to the inflation outlook and is willing to raise the policy rate further if necessary.
Meanwhile, the recovery in oil prices could boost the CAD, a currency linked to commodity prices, as the country is the main oil exporter to the United States.
Traders will be keeping an eye on US nonfarm payrolls, which are expected to add 180,000 jobs in November. Likewise, it is estimated that the unemployment rate will remain stable at 3.9%. These events could trigger volatility in the markets and give a clear direction to the USD/CAD pair.
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.
