The USD/CAD pair remained in negative territory around 1.4020 during the early Asian session on Friday, with the US Dollar (USD) facing renewed selling pressure. Traders opted for a cautious approach as they awaited the release of key labor market data from both the US and Canada later in the day.
On Thursday, data from the US Department of Labor showed that weekly Initial Jobless Claims for the week ending November 29 rose by 9,000 to 224,000, up from the previous week’s revised figure of 215,000 (initially reported as 213,000). This reading exceeded the market consensus of 215,000, leading to a slight dip in the Greenback in the immediate aftermath of the data release.
Market participants are now turning their focus to the upcoming US labor market report, which includes the highly anticipated Nonfarm Payrolls (NFP) and Unemployment Rate. The NFP is expected to show a gain of 200,000 jobs in November, a rebound from October’s dismal rise of just 12,000—the smallest increase since December 2020. The Unemployment Rate is also forecast to tick higher to 4.2% in November from 4.1% in October.
Meanwhile, concerns surrounding potential US trade tariffs on Canada have added pressure to the Canadian Dollar (CAD). The prospect of tariffs, which could rise to as much as 25%, is seen as a significant threat to Canada’s export-driven economy. “If the U.S. puts tariffs of upwards of 25% on Canada, the main adjustment that would take place would likely be through the currency,” said Benjamin Reitzes, Canadian rates & macro strategist at BMO Capital Markets.
As both currencies await crucial economic data, the USD/CAD pair is likely to see volatility depending on the outcomes of these labor market reports.
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