- The Canadian dollar gained on Friday after data showed Canada added 90,400 jobs.
- The likelihood of a June BoC cut fell to 44% after the Canadian jobs report.
- US data reveals higher inflation expectations in the coming year.
The USD/CAD outlook is tipping bearish as the pair lingers near recent lows following Friday’s unexpected rise in Canadian employment. Meanwhile, all eyes are on this week’s US inflation data for clues on Fed policy.
–Are you interested in learning more about crypto robots? Check out our detailed guide-
The Canadian dollar gained on Friday after data showed Canada added 90,400 jobs. This was five times more than economists had expected. Meanwhile, the unemployment rate is stable at 6.1%. The report surprised investors, who were convinced that the Canadian economy was collapsing because of high interest rates.
Accordingly, there was a sharp decline in rate cut expectations. Before the report, investors were pricing in a 60% chance that the Bank of Canada would cut rates in June. However, this figure dropped to 44% after the report. The rise in the Canadian dollar pushed the USD/CAD pair lower, but not for long.
The US dollar strengthened on Friday as data revealed higher expectations for inflation next year. In May, consumers increased their inflation expectations from 3.2% to 3.5%. This can become a big challenge for the Fed because expectations for inflation can actually increase inflation. Still, rate cut bets have risen since the weak US jobs report, with investors now expecting two rate cuts this year for a total of 50 basis points.
Market participants are now awaiting US PPI and CPI reports. This will further shape expectations about the timing of the Fed’s next policy move.
USD/CAD Key Events Today
The pair is likely to consolidate ahead of US inflation data, as no significant reports come from Canada or the US.
USD/CAD Technical Outlook: Bears challenge support at 1.3650
On the technical side, USD/CAD fell to retest the key 1.3650 support level after respecting a solid resistance trend line. The bias is bearish as the price is trading below the 30-SMA with the RSI in bearish territory below 50.
–Are you interested in learning more about buying Dogecoin? Check out our detailed guide-
However, the bearish movement stalled at 1.3650, which reversed the price several times. If the support remains firm again, the price will rise to retest its resistance trend line. However, if the bears are strong enough to break the support this time, the price will fall to retest the 1.3551 level.
Do you want to trade Forex now? Invest in eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
