The USD/CAD pair has been in a tight range recently as investors reflect on the surging crude oil prices, weaker US dollar, and the upcoming Canadian jobs data. It is trading at 1.2680, which is about 2.2% below the highest level this year.
Canada jobs data preview
The most important catalyst for the USD/CAD pair on Friday will be the upcoming Canadian and US jobs numbers.
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Analysts have mixed feelings about the state of the labor market in the two countries. In the United States, they expect that the economy added 150k jobs in January after adding 199k in the previous month.
They also believe that the unemployment rate remained unchanged at 3.9% in January while the average hourly earnings rose by 5.2%. Still, in the past, the numbers by the Bureau of Labor Statistics have been relatively divergent from analysts’ estimates.
The US NFP numbers will be watched closely because the Fed is currently data-dependent. This means that members will focus on key numbers to determine the number of rate hikes this year.
Meanwhile, in Canada, analysts expect the data to show that the country lost thousands of jobs because of the Omicron restrictions. Precisely, the median estimate is that the country lost more than 117.5k jobs in January. As this happened, the unemployment rate spiked from 5.9% to 6.2%.
Still, analysts believe that the labor market will start to stabilise this year as the country reopens and the vaccination rates rise. As such, the Bank of Canada will likely continue with its bullish tone.
Another catalyst for the USD/CAD pair will be the latest Canadian PMI data. Analysts expect that the PMI improved from 45 in December to about 48 in January, A PMI reading of 49 and below is usually a sign that the sector is slowing down.
USD/CAD forecast
The four-hour chart shows that the USD/CAD pair has declined in the past few days. It is trading at 1.2675, which is slightly lower than last week’s high of 1.2800. It is trading at the 25-day and 50-day moving averages while the MACD has crossed the neutral level.
Therefore, at this point, the outlook of the USD/CAD pair is neutral ahead of earnings. The key support and resistance levels to watch are at 1.2600 and 1.2750, respectively.
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Source: https://invezz.com/news/2022/02/04/usd-cad-forecast-ahead-of-us-and-canada-jobs-data/