USD/CAD forecast ahead of Canada and US NFP data

on Nov 4, 2022
  • The US dollar retreated slightly ahead of the upcoming NFP data.
  • Economists expect that the economy added over 200k jobs.
  • Canada will also publish its jobs data on Friday.

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The USD/CAD price slipped to a low of 1.3640, which was slightly lower than this week’s high of 1.3280. Focus now shifts to the upcoming Canada and US non-farm payrolls (NFP) data scheduled for Friday.

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US non-farm payrolls data

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The USD/CAD price has been in the spotlight this week because of this month’s Federal Reserve interest rate decision that happened on Wednesday. In it, the bank committed to keep interest rates higher for a long period as it continued its battle against inflation.

As we wrote in this report, most analysts now expect that the Federal Reserve will hike interest rates by 50 basis points in December. Unless something major happens, the bank will then hike by 25 basis points in February and March. 

In his statement, Jerome Powell reiterate that the Fed will be data-dependent going forward. One of the data the bank will watch will be the latest non-farm payrolls (NFP) numbers. Economists expect the data to show that the economy added 200k jobs in October after adding 263k jobs in September. 

They also expect that the unemployment rate rose from 3.5% to 3.6% while average hourly earnings declind by 4.7%. Still, there is a likelihood that these numbers will have an upward surprise.

Several American companies have warned about layoffs. Twitter is expected to fire over 3,000. Similarly, some investment banks like Morgan Stanley have warned about layoffs as deal-making slows. Other firms like Snap and Meta Platforms are also laying off their workers.

The Fed will also likely watch the upcoming US inflation data scheduled for next week. These earnings will likely provide more information about what to expect.

The USD/CAD price will also react to the latest Canadian jobs data.  Economists expect that the Canadian economy added over 10k workers while the unemployment rate rose to 5.3%. Canada has the worst labor shortage in the G10.

USD/CAD forecast

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The four-hour chart shows that the USD to CAD exchange rate pulled back ahead of the latest US and Canada NFP data. It slipped to a low of 1.3627, which was slightly below the lowest level on October 18. It has also moved to the 50-day moving average while the Relative Strength Index (RSI) has moved below the neutral point.

Therefore, the USD/CAD pair will likely continue falling ahead of the important forex news on jobs data. If this happens, the next key resistance level to watch will be at 1.3725.


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