The USD/CAD price jumped on Friday after the diverging jobs numbers from the United States and Canada. The pair rose to a high of 1.3078, which was the lowest level since May 13th. It has risen by more than 8.50% from its lowest level since March this year.
US and Canada jobs data
The US and Canada published mixed jobs data on Friday. Data published by the Bureau of Labor Statistics (BLS) showed that the economy added over 372k jobs in June. This increase was better than the median estimate of 268k. It was also slightly lower than the previous 384k.
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Further data showed that the private sector rose from 336k to 381k even as companies continued facing elevated inflation risks. This figure was better than the estimate by ADP.
Meanwhile, the unemployment rate remained unchanged at 3.6% while the average hourly earnings rose by 5.1%. The participation rate dropped slightly from 62.3% to 62.2%.
These numbers mean that the Federal Reserve will continue hiking interest rates at an aggressive pace in a bid to fight inflation. Minutes published by the FOMC showed that most officials believe that more tightening was necessary.
The USD/CAD price also rose after the relatively weak Canadian jobs data. According to Statistics Canada, the country lost over 43.2k jobs in June after adding more than 39.8k jobs in the previous month. Analysts were expecting the data to show that the economy added over 23.5k jobs.
The Canadian participation rate declined from 65.3% to 64.9%, Again, that decline was worse than the median estimate of 65.3%.
Still, analysts believe that the Bank of Canada (BOC) will continue hiking interest rates since inflation surged to the highest level in over 40 years.
USD/CAD forecast
The hourly chart shows that the USD to CAD exchange rate has been in a strong bullish trend in the past few days. The pair is trading at 1.3000, which is slightly below this week’s high of 1.3080. It has moved above the 25-period and 50-period moving averages. The price is also above the VWAP indicator.
The USDCAD price is also slightly below the second resistance level at 1.3038. Therefore, there is a likelihood that the pair will likely keep rising as investors target the key resistance level at 1.3100.
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Source: https://invezz.com/news/2022/07/08/usd-cad-forecast-as-canada-and-us-jobs-data-diverge/