- USD/CAD rallies on strong US NFP, weak Canadian labor market data.
- The speculation for Fed to begin rate cuts could be shifted to the second half of this year.
- Canadian labors were fired over March. The jobless rate rose to 6.1%.
The USD/CAD pair prints a fresh four-month high at 1.3640 in Friday’s early American session. The Loonie asset rallies as the United States Bureau of Labor Statistics (BLS) has reported upbeat Nonfarm Payrolls and the Statistics Canada has showed poor Employment data for March.
The US NFP reported that the labor market witnessed 303K fresh payrolls, significantly better than expectations of 200K and the prior reading of 270K. The Unemployment Rate falls to 3.8% from the consensus and the prior reading of 3.9%. Strong labor demand has dented market expectations for the Federal Reserve (Fed) to begin reducing interest rates, which is currently expected from the June meeting.
Robust labor demand is generally followed by strong wage growth as employers are forced to offer higher pay due to shortage of workers. Higher wage growth boosts consumer spending, which keeps inflation stubbornly higher.
On Thursday, Minneapolis Fed Bank President Neel Kashkari said rate cuts won’t be required this year if inflation remains stall. Neel Kashkari forecasted two rate cuts by 2024 in the latest Fed’s dot plot.
Upbeat labor demand has boosted the US Dollar’s appeal. The US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, extends its upside to 104.65.
Meanwhile, the Canadian Dollar weakens as workers were laid-off over month. Canada’s labor market witnessed drawdown of 2.2K workers, which investors forecasted fresh recruitment of 25K jobs. The Unemployment Rate rose strongly to 6.1% from expectations of 5.9% and the prior reading of 5.8%. However, annual Average Hourly Earnings grew at a higher pace of 5.0% from 4.9% in February.
Weak labor demand will boost expectations for the Bank of Canada (BoC) pivoting to rate cuts sooner.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD drops toward 0.6500 after dismal Aussie Retail Sales, mixed China's PMIs
AUD/USD is extending losses toward 0.6500, hit by an unexpected drop in the Australian Retail Sales for March while China's NBS April PMI data came in mixed. Upbeat China's Caixin Manufacturing PMI data failed to lift the Aussie Dollar amid a softer risk tone and the US Dollar rebound.
USD/JPY holds rebound to 157.00 after Monday's suspected intervention-led crash
USD/JPY is trading close to 157.00, staging a solid rebound in the Asian session on Tuesday. The pair reverses a part of heavy losses incurred on Monday after the Japanese Yen rallied hard on probable FX market intervention by Japan's authorities. Poor Japan's jobs and Retail Sales data weigh on the Yen.
Gold price traders remain on the sidelines ahead of FOMC decision on Wednesday
Gold price remains confined in a narrow range as traders prefer to wait on the sidelines. Reduced Fed rate cut bets revive the USD demand and act as a headwind for the metal. Investors now await the FOMC decision and US macro data before placing directional bets.
BNB price risks a 10% drop as Binance founder and ex-CEO Changpeng Zhao eyes Tuesday sentencing
Binance Coin price is dumping, with the one-day chart showing a defined downtrend. While the broader market continues to bleed, things could get worse for BNB price ahead of Binance executive Changpeng Zhao sentencing on Tuesday, April 30.
FX market still on intervention watch
Asian foreign exchange traders will be particularly attentive to any signs of Japanese intervention on Tuesday, following reports of Tokyo's involvement in the market on Monday. This intervention action propelled the yen upward from its 34-year low of 160 per dollar, setting off shockwaves of volatility.