Should I buy the USD/CAD ahead of Canada and US NFP data?

The USD/CAD price held steady as investors waited for the upcoming US and Canada October jobs numbers. The pair is trading at 1.2460, which is about 1.40% above the lowest level in October.

Canada and US jobs numbers

The USD/CAD pair held steady in the overnight session as investors reflected on the relatively hawkish Federal Reserve decision. In its meeting this week, the bank decided to leave interest rates unchanged. It also decided to start tapering its asset purchases. The expectation is that the Fed will stop tapering by mid next year and then start the rate hike cycle.

The hawkish Fed now coincides with what the Bank of Canada (BOC) has been doing. The bank has already started ended its quantitative easing policy. This happened after it tapered the purchases about 4 times in the past twelve months. At the same time, it hinted that rate hikes were on their way.

The USD/CAD will next react to the latest US and Canadian jobs numbers. Economists expect that the two countries made some progress in the previous month.

In the US, economists expect that the economy added about 400k jobs in October. This will be a relatively strong increase from what it did in September. However, in the past two straight months, these expectations have been wrong.

Meanwhile, the US unemployment rate is expected to decline from 4.7% to a pandemic-era low of 4.6%. Wages and labour participation are expected to keep doing well.

Elsewhere, in Canada, analysts expect that the economy added about 50,000 jobs in October while the unemployment rate moved from 6.9% to 6.5%. 

USD/CAD forecast

The four-hour chart shows that the USD/CAD pair bottomed at 1.2287 in October. Since then, it has been making a comeback and is currently trading at 1.2460. A closer look shows that the pair has moved above the important neckline of the inverted head and shoulders pattern at 1.2430. This was also the highest level on October 27th.

The pair has moved above the short and longer-term moving averages and the Ichimoku cloud. Therefore, the path of the least resistance for the pair is to the upside. If this happens, the next key level to watch will be at 1.2500.