USD/CAD forecast ahead of the Canada jobs data

The USD/CAD pair was in a tight range on Friday morning as investors waited for the latest Canadian jobs data. It is trading at 1.2787, which was a few points below this week’s high of 1.2895. 

Canada jobs data ahead

The Canadian economy is doing relatively well as the country continues its recovery process. Recent data showed that the country’s manufacturing and services PMIs did well in February.

On Friday, the Canadian statistics agency will publish the latest employment numbers. Analysts expect the data to show that the country’s economy added over 160k jobs in February. If they are accurate, it will be a sharp rebound after Canada lost over 200k jobs in the previous month. 

Further data are expected to show that the country’s unemployment rate retreated from 6.5% in January to 6.2% in February while the participation rate rose from from 65.0% to 65.3%.

These numbers will come exactly a week after the US published strong numbers. According to the Bureau of Labor Statistics (BLS), the US added over 600k jobs in February while the unemployment rate fell to about 3.8%.

Therefore, strong jobs data from Canada will mean that the Bank of Canada will likely continue with its hawkish push. In February, the bank decided to hike interest rates for the first time since the pandemic started.

The USD/CAD pair has also been in the spotlight because of the surging crude oil prices. The loonie tends to benefit when oil prices rise because of the vast amount that Canada sells in the international market every year. 

USD/CAD forecast

The daily chart shows that the USD/CAD pair has been in a tight range in the past few weeks. It is trading at a relatively lower level than the year-to-date high of 1.2960. It has also moved slightly above the 25-day and 50-day moving averages while the price is above the ascending trendline shown in blue.

Therefore, the pair will likely continue with the bearish trend after Canada publishes its jobs numbers. If this happens, the next key support level to watch will be at 1.2700.

On the flip side, a move above the key resistance level at 1.2900 will signal that bulls have prevailed, which will push it above the YTD high.