The Bank of Canada made a predictable 25bp rate cut on Wednesday, causing minimal market movement. Instead, the USD/CAD dip was influenced by weak US JOLT figures, according to ING’s FX strategist Francesco Pesole.
Why NFP Matters More Than Canadian Payrolls for USD/CAD
Canada and the US are both releasing jobs figures today. The consensus for Canadian payrolls is 25k, consistent with recent months. However, this may not be the most reliable indicator for market expectations.
Focus on the unemployment rate, expected to increase from 6.4% to 6.5%. A rise from January’s 5.7% would support predictions of more Bank of Canada cuts.
While US payrolls have a bigger impact on USD/CAD, the pair nears a value of 1.345 which suggests it may be undervalued. The Canadian dollar could struggle against other high-beta currencies if US economic data disappoints.
Analysis: How This Affects You and Your Finances
If you’re invested in USD/CAD or considering it, keep an eye on US job reports. A weak US economy could push the Canadian dollar lower, impacting your investments. Pay attention to unemployment rates as they signal potential market trends. Stay informed and make strategic decisions based on upcoming data releases.