USD/CAD Outlook: Buyers push on US and Canadian jobs data

• The Canadian dollar fell to a two-week low on Friday.

• Canada’s unemployment rate rose from 6.4% to 6.5%, increasing the chances that the Bank of Canada will cut interest rates further.

• The US economy added 142,000 jobs, below expectations for 160,000.

The USD/CAD outlook shows a bullish shift in sentiment as investors weigh the US and Canadian labor sectors. Reports on Friday showed that the US labor market is not doing as badly as initially feared. On the other hand, Canada’s unemployment rate rose, raising expectations of a rate cut by the Bank of Canada.

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The Canadian dollar fell to a two-week low on Friday as domestic data pointed to more significant rate cuts in Canada. Canada’s economy added 22,100 jobs, missing forecasts for 23,700. At the same time, the unemployment rate rose from 6.4% to 6.5%. The labor market is shrinking rapidly, which could push the Bank of Canada to consider more significant rate cuts. After the report, markets priced in 63 bps of future rate cuts.

Meanwhile, the US labor market was in slightly better shape. The economy added 142,000 jobs, below expectations for 160,000. Meanwhile, the unemployment rate fell to 4.2 percent, easing recession fears. The latest report spooked investors, with the unemployment rate climbing to 4.3%. As a result, markets increased bets on a 50 bps rate cut. However, with the latest numbers, the Fed may prefer a 25 bps rate cut.

Investors will focus on US consumer inflation data on Wednesday this week. Economists expect the headline figure to cool further from 2.9% to 2.6%, bringing price pressures closer to the Fed’s target.

Key USD/CAD Events Today

The pair could start the week slowly as neither the US nor Canada will issue any major reports today.

USD/CAD Technical Outlook: Price action supports more upside

Technically, the USD/CAD price is approaching the key resistance level of 1.3600. The price is above the 30-SMA and the RSI is near the overbought region, indicating a bullish bias. The trend recently reversed, with the bears losing control at the 1.3450 support level.

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However, the price momentarily fell below the SMA after the bulls took over. The price action here showed that the bullish momentum was stronger. The price made a doji candlestick pattern before making a large bullish candle. Consequently, USD/CAD could soon break above 1.3600.

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