The USD/CAD price has staged a strong recovery ahead of the upcoming US consumer inflation and Canada’s May jobs numbers. The pair rose to a high of 1.2743, which was the highest level since May 27th of this year.
US inflation and Canada jobs data
The Canadian dollar has retreated even as the price of crude oil and natural gas jumped. Oil has risen comfortably above $120 as the demand and supply imbalance continued.
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The performance is mostly because of the upcoming economic data from the United States and Canada. The Bureau of Labor Statistics will publish the latest consumer inflation data. Analysts believe that the headline CPI declined slightly from 8.3% to 8.1% while core CPI fell from 6.2% to 6.1%.
These numbers will come a week after the US published strong jobs numbers. The economy added over 390k jobs in May, which was better than the median estimate of 320k. In the same period, the country’s unemployment rate rose slightly to 3.6%.
These numbers mean that the Federal Reserve will continue with its hawkish tone in the coming months. It will hike rates by 0.50% next week and continue with its quantitative tightening policy.
The USD/CAD will likely react to the upcoming jobs data from Canada. Analysts expect the data to show that the country’s economy added just 30k jobs in May while the unemployment rate dropped to 5.2%.
Like in the US, Canada is facing strong inflationary pressures, which has pushed the Bank of Canada to hike at a faster pace than expected. Therefore, if the labor market continues tightening, the bank will likely continue hiking rates in the coming months.
USD/CAD forecast
The four-hour chart shows that the USD/CAD pair has been in a strong bearish trend in the past few days. Along the way, the pair has moved to the 38.2% Fibonacci retracement level. The 25-period and 50-period moving averages have made a bullish crossover while the MACD has moved above the neutral level.
Therefore, the pair will likely keep rising after the latest US inflation data from the US and Canada jobs data. If this happens, the next key resistance level to watch will be at 1.2800.
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Source: https://invezz.com/news/2022/06/10/usd-cad-forecast-ahead-of-canada-jobs-and-us-inflation-data/