The Canadian Dollar (CAD) remained relatively unchanged on Thursday as market participants braced for crucial employment figures from both the US and Canada on Friday. While expectations for a September rate cut by the US Federal Reserve remain high, the possibility of a delay until November is still on the table.
Market Drivers: Canadian and US Economic Data
Canadian economic indicators released this week showed mixed signals. The Ivey Purchasing Managers Index (PMI) fell sharply in May, missing market expectations, while US Initial Jobless Claims rose more than anticipated. Additionally, US Labor Costs eased in the first quarter, supporting the notion of a potential Fed rate cut.
Market Focus: US Nonfarm Payrolls
The US Nonfarm Payrolls (NFP) report for May is the main focus for markets on Friday, with forecasts anticipating a moderate increase in net new jobs and a slight uptick in average hourly earnings.
Technical Analysis: CAD Consolidates as Momentum Fades
The Canadian Dollar (CAD) experienced muted trading on Thursday, with minimal fluctuations against major currencies. The USD/CAD pair tested the 1.3700 level but struggled to gain significant upward momentum. The pair remains above a demand zone between 1.3630 and 1.3590, while the 50-day Exponential Moving Average (EMA) at 1.3650 serves as a potential support level.
Despite the recent pullback from 2024 highs, the long-term technical outlook for USD/CAD remains bullish, with the rising 200-day EMA at 1.3560 acting as a key support level for potential bearish declines.
