Forex Analysis by Fawad Razaqzada covering: USD/CAD, US Dollar Index Futures. Read Fawad Razaqzada's latest article on Investing.com
faces a big test this week, for not only do we have significantly important data from the US, but there’s also a rate
On the other hand, if job growth falls short—around 100,000 new jobs—and the unemployment rate ticks up, the dollar could face further weakness, putting pressure on the USD/CAD as the market anticipates a larger 50 basis point rate cut from the Fed. For now, theJerome Powell hinted at the possibility of several rate cuts during his speech at Jackson Hole a couple of weeks ago, noting that inflation had dropped"significantly" and that"the labor market is no longer overheated.
At its last meeting in July, the BoC’s Governing Council pointed out that the surplus supply in the Canadian economy has helped to ease inflation recently, justifying a shift towards looser monetary policy, especially as the Canadian labor market has started to show signs of cooling. Two months of surprise contraction in jobs , means there is now even more reason for the BoC to cut.
But after such a sharp decline and ahead of key major macro events, it is hardly surprising that the USD/CAD is now staging what looks like a short-covering rebound. However, it remains to be seen if we are going to see a more pronounced recovery.
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