Canadian dollar extends losses after higher NFP print

• The Canadian dollar (CAD) edged lower after better-than-expected US NFP numbers.
• Canada saw an increase in the Ivey PMI, but was overlooked by market watchers.
• A firm increase in US NFP jobs overturned hopes of a rate cut to end the trading week.

The Canadian Dollar (CAD) fell further on Friday, driven by a market extension in recent Greenback tenders that sent the US Dollar higher across the board after US Non-Farm Payrolls (NFP) numbers came in well above the expectations.

Canada’s Ivey Purchasing Managers’ Index (PMI) rebounded in September, but the Canadian data point was sidelined by investors fully focused on US wages data. US NFP net job additions were well above expectations in September, with positive revisions to the jobs numbers for several months. The rapidly changing market outlook on the US labor market has largely changed the market’s bets on a rate cut by the Federal Reserve (Fed) in November.

Daily digest market moves

• The Canadian dollar lost a fifth of one percent against the greenback on Friday.
• Canada’s Ivey PMI for September recovered ground, climbing back to 54.9 after falling to 50.3 the previous month.
• US NFP jobs data came in well above expectations, adding 254,000 new jobs in September, compared to the forecast of 140,000. The August NFP print was also revised upwards to 159K.
• The US unemployment rate also fell to 4.1% from 4.2% previously, further burying market hopes for a double rate cut from the Fed in November.
• According to CME’s FedWatch tool, rate traders now see an overwhelming 95% chance of a single 25bps cut from the Fed on Nov. 7, with a beleaguered 5% expecting no move at all.
• Hopes for a second 50 bps rate cut in November have completely evaporated.

Canadian Dollar Price Forecast

The USD/CAD pair has moved higher over the past few sessions, with the pair at a critical juncture near the 50-day (1.3584) and 200-day (1.3602) exponential moving averages (EMA). After a sustained downtrend from mid-August to early September, the pair showed signs of stabilization, returning from the 1.3450 level.

This recent price action signals that USD/CAD could test the upper bounds of its consolidation range, with potential resistance near the 1.3600 handle. While the pair remains below both the 50-day and 200-day EMAs, the proximity of these moving averages suggests an area of ​​significant technical resistance. A break above these levels could open the door for further gains, targeting the 1.3700 level.

On the downside, the pair appears to have found support around 1.3450, a key level that has acted as a floor level in recent trading. Failure to hold above this level may lead to renewed selling pressure, potentially leading the pair back to the 1.3350 region.

USD/CAD Daily Chart