The USD/CAD exchange rate moved sideways on Friday after the latest Canadian and US jobs data. It was trading at 1.3720, which is slightly below the year-to-date high of 1.3835. It has risen by more than 8.45% this year.
US and Canada jobs data
The USD/CAD price rose after the US published the latest non-farm payrolls (NFP) data. According to the Bureau of Labor Statistics (BLS), the American economy created more than 268k jobs in September after it added over 315k in the previous month. This increase was better than the median estimate of 250k.
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Additional data showed that the unemployment rate dropped from 3.7% to 3.5%. The participation rate fell from 62.4% to 62.3%. The participation rate is important data that measures the number of people of working age that are in the labor market.
Meanwhile, wages held relatively steady as well. The average hourly earnings remained at 0.3%. This increase translated to a year-on-year increase of 5.0.%.
Therefore, these numbers mean that the Federal Reserve will likely continue hiking interest rates in the coming months. It has already hiked rates by 300 basis points. In statements this week, Fed officials like Raphael Bostic and James Williams said that the bank will continue hiking rates.
Another important forex news was the latest Canada jobs data. According to Statistics Canada, the country’s unemployment rate dropped from 5.4% at 5.2% in September. The economy added about 21.1k jobs after shedding more than 20k jobs in August.
Like the Federal Reserve, the Bank of Canada (BoC) has been more aggressive in hiking interest rates this year. It has hiked by 300 basis points and pushed the official cash rate to a 14-year high of 3.25%. Analysts expect another hike when it meets later this month. In a statement, the bank’s governor said:
“We have yet to see clear evidence that underlying inflation has come down. When combined with still-elevated near-term inflation expectations, the clear implication is that further interest rate increases are warranted.”
USD/CAD forecast
The four-hour chart shows that the USD to CAD pair has been in a strong bullish trend in the past few months. It has managed to rise above the 25-day and 50-day moving averages. The Relative Strength Index (RSI) has moved above the neutral point. Therefore, the pair will likely continue rising as bulls target the next key resistance level at 1.3900.
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