- The greenback is heading for a sixth week of gains.
- Market participants fear a 25% tariff on Canadian goods.
- Traders are cautious ahead of employment figures from Canada and the US.
The USD/CAD price analysis indicates increased tariff uncertainty, which has given the dollar an edge over its peers, such as the Canadian dollar. At the same time, market participants remain cautious ahead of the pivotal US nonfarm payrolls report. The numbers will give clues on future Fed moves.
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The greenback was heading for a sixth week of gains as US Treasury yields remained elevated due to Trump’s tariff proposals. Recent reports have shown that Trump remains aggressive about his tariffs. Therefore, market participants fear a 25% tariff on Canadian goods that could hurt the local economy.
Canada exports most of its goods to the US. An initial report that Trump would only focus on critical sectors had given the loonie some relief. However, when the president-elect denied such plans, the currency gave up its gains.
Traders are also cautious about the upcoming employment figures from Canada and the US. According to economists, Canada’s economy might add 25,000 jobs in December, a slowdown from the previous month’s over 50,500 increase. Meanwhile, the unemployment rate might increase from 6.8% to 6.9%.
On the other hand, job growth in the US might also slow, with the economy adding 160,000 jobs in December. However, unemployment will likely hold at 4.2%. These reports will guide the BoC and the Fed on future policy moves.
USD/CAD key events today
- Canada Employment Change
- Canada Unemployment Rate
- US Average Hourly Earnings m/m
- US Non-Farm Employment Change
- US Unemployment Rate
USD/CAD technical price analysis: Bulls gear up for a 1.4450 retest
On the technical side, the USD/CAD price trades above the 30-SMA with the RSI in bullish territory. However, the price has chopped through the SMA for a while, consolidating between the 1.4450 resistance and the 1.4300 support.
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Previously, USD/CAD was trading in a bullish trend above the 30-SMA. Therefore, there is a chance the consolidation is a pause as bulls slowly regain momentum. If this happens, the price will soon break above the 1.4450 resistance to continue the uptrend.
However, the price will likely remain in consolidation if the resistance holds firm. The trend will only reverse if bears gain enough momentum to break below the 1.4300 support and make a lower low.
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