- The US added more jobs in May than economists had forecast.
- The US unemployment rate rose from 3.9% to 4.0%.
- The total Fed cuts expected this year fell from 50 to 35 basis points.
The USD/CAD forecast looks promisingly bullish as the dollar surges following Friday’s unexpectedly strong jobs report. The US nonfarm payrolls overshadowed Canada’s increase in employment and weighed on the Canadian dollar.
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Data on Friday showed that the US added more jobs in May than economists had forecast. Employment rose 272,000 compared to expectations of an 185,000 increase. Consequently, the labor market remains robust despite high interest rates. The Fed will likely push back the timing for the first cut as it awaits more evidence of a slowdown in the economy.
However, there were some signs of weakness in the sector, as seen in the unemployment rate, which rose from 3.9% to 4.0%. Still, it was not enough to keep rate cut expectations from falling. Before the report, there was nearly a 70% chance that the Fed would cut rates in September. However, this dropped to 50% when market participants realized that demand in the labor market remained relatively high. Moreover, the total cuts expected this year fell from 50 to 35 basis points.
At the same time, Canada released its monthly employment report, which showed a marginal increase in employment, beating forecasts. Meanwhile, the unemployment rate increased from 6.1% to 6.2% in April. The result was a decline in the likelihood of a Bank of Canada rate cut in July from 50% to 44%. However, the rising US dollar overshadowed any strength in the Canadian dollar.
USD/CAD key events today
There won’t be any high-impact releases from the US or Canada today. As a result, the price will likely consolidate.
USD/CAD technical forecast: Bulls eye 1.3780 after channel breakout
On the technical side, the USD/CAD price has made a bold, bullish move and broken out of its shallow bearish channel. Initially, bulls attempted to break out of the channel resistance but failed, making a large wick. The price then pulled back to retest the 30-SMA support, which held firm. The pair made another strong surge from here that breached the channel resistance and the 1.3720 level.
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The bulls are now eyeing the 1.3780 level. Here, the rally might pause for a break before continuing higher or retesting the 30-SMA.
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- Source: https://www.forexcrunch.com/blog/2024/06/10/usd-cad-forecast-robust-nfp-report-sends-dollar-higher/
