The US dollar remains poised for potential gains as traders anticipate the release of December’s nonfarm payroll (NFP) data. In a relatively quiet pre-NFP trading session, the USD is idling but could find renewed strength depending on the employment figures. Here’s a breakdown of the latest market developments and their implications for the USDCAD pair and global currency movements.
Table of Contents
Canada’s Labour Force Survey (LFS): Modest Job Gains Expected
Canada’s Labour Force Survey for December is expected to show an addition of 25,000 jobs, a slowdown from November’s 50,500 gain. Meanwhile, the unemployment rate is projected to rise slightly to 6.9% from 6.8%.
Despite these updates, the Canadian data is expected to have minimal impact on the foreign exchange market. Traders remain more focused on broader factors, such as US economic data and the looming threat of tariffs.
Trump’s Tariff Threat Clouds Canadian Outlook
A potential 25% tariff on all goods imported from Canada to the US looms large. If enacted, it could severely impact Canada’s economy, driving it into a deep recession and causing unemployment to spike.
For now, this remains a threat. However, the uncertainty it creates has overshadowed Canadian economic indicators, further weakening the Canadian dollar.
US Nonfarm Payroll Data: Market Game-Changer
The US December NFP report is expected to show a gain of 160,000 jobs, a decline from November’s 227,000 increase, with the unemployment rate holding steady at 4.2%.
A higher-than-expected NFP figure could fuel US dollar demand, as it would imply stronger labor market conditions and potentially delay the Federal Reserve’s monetary policy pivot. Such an outcome would likely put further pressure on the Canadian dollar.
USDCAD: Market Overview
- Opening Level: 1.4407
- Overnight Range: 1.4393–1.4422
- Previous Close: 1.4396
- Key Commodities:
- WTI Crude Oil: $75.78
- Gold: $2,661.35
The Canadian dollar remains in consolidation mode, trading with a negative bias against the US dollar ahead of the critical employment data releases.
Canadian Dollar Outlook USD/CAD Trends Amid Trump, Trudeau, Tiff, and Tariffs
Canadian Dollar Strengthens as CPI Data Reduces Expectations for Large Rate Cuts
Global FX Market Highlights
- EURUSD: Traded quietly in a range of 1.0281–1.0312 as traders await the US NFP data. FX option expiries could add volatility near the 10 a.m. NY maturity window.
- GBPUSD: Hovered between 1.2267 and 1.2311. Ongoing concerns about the UK budget and rising debt levels are keeping the pound under pressure.
- USDJPY: Moved within a 157.62–158.45 range, supported by firm US Treasury yields (10-year yield at 4.70%) but capped by speculation of a January rate hike and intervention risks.
- AUDUSD: Drifted between 0.6181 and 0.6207, weighed down by concerns about the Reserve Bank of Australia potentially cutting rates in February and challenges in China.
Key Catalysts for the Day
The focus remains on the US NFP data and its implications for Federal Reserve policy. A strong jobs report could ignite renewed demand for the US dollar, pressuring other currencies, including the Canadian dollar. Traders will also keep a close eye on any updates regarding tariffs and central bank policy shifts, which could shape market movements in the weeks ahead.
2 thoughts on “Canadian Dollar Slips Lower Against the U.S. Dollar”