USD/CAD forex: signal ahead of NFP and Canada jobs data

The USD/CAD exchange rate continued its winning streak ahead of the latest US and Canada jobs numbers. It jumped for six straight days and reached a high of 1.3370 as the US dollar index (DXY) has risen to $102.

US NFP and Canada jobs data ahead

The USD/CAD pair has been in a strong uptrend in the past few days as investors started questioning the Fed’s dovish statement. Fed minutes published on Wednesday revealed that most officials supported cutting in 2024.

However, there are concerns that the bank will not start as early as in March. This view was confirmed on Wednesday when Fed’s Tom Barkin of Richmond Fed warned that a rate hike could also happen.

This view has been confirmed as the crisis in the Middle East, which has pushed shipping costs higher. Brent crude has risen to $78 while West Texas Intermediate (WTI) has risen to $73. As such, there are signs that inflation will be sticky for a while.

The next key USD/CAD news to watch will be the upcoming US and Canadian jobs numbers. Economists polled by Reuters expect the data to show that the unemployment rate rose to 3.8% in December. 

They also expect the data to reveal that the economy added over 170k jobs, down from November’s 199k. Wages are expected to grow by 3.9%, down from the previous 4.0%. 

Data by ADP published on Thursday showed that the private sector created 164k in December. A separate report showed that the number of job vacancies tumbled to a two-year low.

The USD/CAD pair will react to the latest Canadian jobs numbers. Like in the US, economists believe that the unemployment rate rose from 5.8% to 5.9% in December as the economy added 13.5k jobs.

USD/CAD technical analysis

USD/CAD chart by TradingView

The daily chart shows that the USD/CAD pair has bounced back in the past few days. Still, the pair remains below the 50-day Exponential Moving Average. At the same time, the Relative Strength Index (RSI) has pointed upwards and is nearing the neutral point of 50.

Further, the two lines of  Stochastic Oscillator have risen. Therefore, I suspect that the pair will continue rising ahead of the two jobs reports and then resume the downward trend. If this happens, the pair will likely retest the support at 1.3177.