The USD/CAD pair exhibits slight upward movement, trading near 1.3660 in the early European session on Monday. Market participants assess the varied Canadian employment figures for January. The key labor market data from the US is set to be the focal point later on Wednesday. On Friday, Federal Reserve Vice Chair Philip Jefferson remarked that current interest rates are “roughly in the range of neutral,” noting the stabilization of the job market and the policy’s readiness to address risks, while underscoring that future actions will be guided by data. Meanwhile, San Francisco Fed President Mary Daly indicated that she believes one or two additional interest rate cuts might be necessary to tackle the deteriorating labor market.
Market participants will closely monitor the addresses from Federal Reserve officials later on Monday, including Christopher Waller, Stephen Miran, and Raphael Bostic. Any dovish remarks from policymakers may exert downward pressure on the Greenback relative to the CAD in the short term. USD/CAD is experiencing slight increases, hovering around 1.3660 during the early European session on Monday. Federal Reserve officials are conveying mixed messages regarding potential rate cuts. In January, Canada experienced an unexpected decline of 24,800 jobs; however, the Unemployment Rate fell to a 16-month low of 6.5%.
The focus will turn to the US January employment report on Wednesday for insights regarding the Fed’s monetary policy trajectory. The report experienced a delay from the previous week as a result of a four-day partial government shutdown that concluded earlier in February. Expectations indicate that the US economy is set to see an addition of 70,000 jobs in January, with the Unemployment Rate anticipated to hold steady at 4.4% throughout this timeframe.
On the Loonie front, Statistics Canada reported on Friday that Canada experienced an unexpected decline of 24,800 jobs in January, with all losses occurring in part-time positions. However, the Unemployment Rate in Canada decreased to 6.5%, marking the lowest level since September 2024, surpassing expectations of 6.8%. This report has mitigated the downside risk to Canada’s growth and policy outlook, refining expectations for significant easing by the Bank of Canada. This, consequently, may support the CAD and serve as a headwind for the pair.