The USD/CAD exchange rate drifted upwards after the latest American non-farm payrolls (NFP) data and ahead of the upcoming Bank of Canada (BoC) interest rate decision. The pair was trading at 1.3500, which was a few points above last week’s low of 1.3400.
Bank of Canada, US inflation
The USD to CAD exchange rate reacted to the latest American NFP data. According to the Bureau of Labor Statistics (BLS) the American economy created more than 236k jobs in March after rising by 238k in the previous month. The unemployment rate dropped to 3.5% from the previous 3.6% while the participation rate rose to the highest point since before the pandemic.
The next key catalyst for the USD/CAD pair will be the upcoming American consumer price index (CPI) data. Economists believe that inflation remained at an elevated level in March. Precisely, the headline CPI is expected to come in at 5.2% while core CPI is expected to jump to 5.9%.
These inflation numbers will be important because the Fed has hinted that it will be data-dependent in the coming months. And inflation is an important part of the Federal Reserve since it forms part of the dual mandate.
The other important CAD news will be the upcoming Bank of Canada decision scheduled for Wednesday. Economists expect that the bank will continue pausing its interest rates. The bank has left interest rates at 4.50% in the past two meetings. It will also continue with its quantitative tightening, which it hopes will end in 2025.
USD/CAD technical analysis
USD/CAD chart by TradingView
The 4H chart shows that the USD to CAD exchange rate has been in a slow bullish trend in the past few days. It has risen from a low of 1.3400 on April 4 to a high of 1.3530. The pair has formed an ascending channel shown in black. At the same time, the Relative Strength Index (RSI) has moved above the neutral point of 50.
The USD/CAD pair remains below the 50-period moving average. Therefore, the pair will likely continue falling as sellers target the next key support level at 1.3410. This price is about 63 basis points below the current level.
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