- Markets expect the employment figures to show an additional 170,000 US jobs in December.
- Data revealed the seventh consecutive monthly contraction in Canada’s service sector.
- The Canadian dollar was weaker due to a decline in oil prices.
The USD/CAD price analysis on Friday showed a bullish mood sparked by a stronger dollar due to reduced expectations of Fed rate cuts this year. Moreover, the currency was on hold as the market eagerly awaited the highly anticipated US payroll data later in the day. Markets expect the employment figures to show an additional 170,000 jobs in December, a decrease from the 199,000 recorded in November.
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Meanwhile, the currency was mostly steady in the previous session as the Canadian dollar gave up earlier gains due to concerns about a possible recession. Notably, data revealed the seventh consecutive monthly contraction in Canada’s service sector. The decline in service sector activity in December was influenced by high borrowing costs that impacted the housing market.
The business activity index was at 44.6, well below the 50 threshold separating expansion from contraction. Moreover, the index has been below 50 since June.
Furthermore, the Canadian dollar was weaker due to a decline in oil prices. This decline came as significant weekly gasoline and distillate stock builds overshadowed a larger-than-expected crude stock draw.
Additionally, Canada’s employment report for December, scheduled for Friday, might provide additional insights into the state of the economy.
Meanwhile, data in the US on Thursday revealed that private payrolls saw a substantial increase of 164,000 jobs in the last month. It is the most significant monthly gain since August.
USD/CAD key events today
- Canada’s Employment Change
- Canada’s unemployment rate
- US nonfarm payrolls
- US unemployment rate
- US ISM services PMI
USD/CAD technical price analysis: Momentum fades at resilient resistance
On the technical side, USD/CAD has stalled at the resistance zone comprising the 1.3350 resistance level and the 0.382 fib level. The indicators on the chart point to a bullish bias, with the 30-SMA moving up and trading below the price and the RSI above 50.
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However, bulls might be exhausted as the RSI has made a slight bearish divergence. Although the price is steady at the resistance zone, the RSI shows progressively weaker momentum. Consequently, we might get a drop to retest the 30-SMA support or lower. Bulls can only continue the uptrend if they regain momentum and keep the price above the 30-SMA.
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- Source: https://www.forexcrunch.com/blog/2024/01/05/usd-cad-price-analysis-fed-rate-cut-bets-lower-eyes-on-nfp/
