USD/CAD extends its downside below 1.3670, US NFP data looms
- USD/CAD trades on a softer note around 1.3660 on Friday.
- The US Initial Jobless Claims remained steady at 208,000 last week.
- The BoC Governor said there’s a limit to how much Canadian monetary policy can diverge from the US.
The USD/CAD pair extends its downside near 1.3660 amid the weaker US Dollar (USD) on Friday during the Asian trading hours. The Greenback has edged lower since the Federal Reserve left interest rates unchanged on Wednesday, as Fed Chair Jerome Powell was less hawkish than many feared. The highlight will shift to the US April employment data, due later on Friday.
The Fed kept monetary policy on hold on Wednesday but signaled that it would take longer to gain confidence that inflation is moving towards the 2% target. Powell said that it’s unlikely that the next policy rate move will be a hike” and that the Fed would need additional data to decide on the rate cuts. Apart from this, the US central bank announced a slowing in its balance sheet runoff (QT).
On Thursday, the US Department of Labor (DOL) showed that the Initial Jobless Claims in the US for the week ended April 27 remained unchanged at 208,000, better than the expectation of 212,000.
On the Loonie front, Bank of Canada (BoC) Governor Tiff Macklem said on Thursday that there’s a “limit” to how much Canadian monetary policy can diverge from the US, they’re not close to that limit. Financial markets expect the BoC to cut interest rates in June or July, as inflation has eased significantly in Canada. The divergence of US and Canadian interest rates could exert some selling pressure on the Canadian Dollar (CAD) in the months to come and cap the downside of USD/CAD.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
