USD/CAD advances to near 1.4450 as US jobs figures bolster hawkish mood surrounding Fed

FXStreet
Updated
Mitrade
coverImg
Source: DepositPhotos


  • USD/CAD extends its winning streak as traders expect the Fed to keep interest rates steady in January.


  • US Nonfarm Payrolls increased by 256K in December, exceeding expected 160K and November’s figure of 212K.


  • The downside of the commodity-linked CAD could be restrained due to higher Oil prices.


USD/CAD continues to gain ground for the fifth successive day, trading around 1.4440 during the European hours on Monday. However, the USD/CAD pair appreciated as the US Dollar (USD) strengthened as the robust US labor market data for December will likely reinforce the US Federal Reserve's (Fed) stance to keep interest rates steady in January.


The US Dollar Index (DXY), which tracks the US Dollar’s (USD) performance against six major currencies, reached to 109.98, the highest level since November 2022, during the Asian hours on Monday. Additionally, higher yields are contributing support for the Greenback, with 2-year and 10-year US Treasury bond yields standing at 4.41% and 4.79%, respectively, at the time of writing.


Data from the US Bureau of Labor Statistics (BLS), released on Friday, reported that Nonfarm Payrolls (NFP) increased by 256K in December, significantly exceeding market expectations of 160K and surpassing the revised November figure of 212K (previously reported as 227K). Moreover, the US Unemployment Rate edged down to 4.1% in December from 4.2% in November. However, annual wage inflation, measured by the change in Average Hourly Earnings, dipped slightly to 3.9% from 4% in the prior reading.


Additionally, the risk-sensitive Canadian Dollar (CAD) faces downward pressure amid growing concerns over President-elect Donald Trump's promises to impose tariffs on imports. "We are assuming that Trump implements tariffs on Canada this year, which is likely to weigh on the loonie," said Stephen Brown, Deputy Chief North America Economist at Capital Economics. On Sunday, Canadian Prime Minister Justin Trudeau stated that while the government is not seeking a trade war with the new administration, it will have to respond if the US imposes tariffs on Canadian goods.


However, the commodity-linked CAD may limit its losses as rising Oil prices provide support, given Canada’s position as the largest Oil exporter to the United States (US). West Texas Intermediate (WTI) extends its rally for the third consecutive session, trading near $77.00 per barrel, just below the $77.46 mark reached on Monday, the highest level since October 8. Crude Oil prices continue to rise amid heightened concerns over potential supply disruptions driven by new US sanctions on Russia's Oil industry.

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
US Dollar Index Price Forecast: Treads water above nine-day EMA support near 108.00The US Dollar Index (DXY) recovers its losses from the previous two sessions, trading around 108.10 during Asian hours on Wednesday.
Author  FXStreet
14 hours ago
The US Dollar Index (DXY) recovers its losses from the previous two sessions, trading around 108.10 during Asian hours on Wednesday.
placeholder
Nonfarm Payrolls forecast: US job growth expected to slow in January amid Fed uncertainty US Nonfarm Payrolls are set to increase by 170K in January after reporting 256K in December.
Author  FXStreet
Feb 07, Fri
US Nonfarm Payrolls are set to increase by 170K in January after reporting 256K in December.
placeholder
Japanese Yen rallies to near two-month top against USD amid hawkish BoJ expectationsThe Japanese Yen (JPY) remains on the front foot against its American counterpart during the Asian session on Thursday amid the growing acceptance that the Bank of Japan (BoJ) would keep raising interest rates.
Author  FXStreet
Feb 06, Thu
The Japanese Yen (JPY) remains on the front foot against its American counterpart during the Asian session on Thursday amid the growing acceptance that the Bank of Japan (BoJ) would keep raising interest rates.
placeholder
Australian Dollar edges lower amid rising fears over US-China trade warThe Australian Dollar (AUD) edges lower against the US Dollar (USD) amid an increased risk aversion following rising fears over US-China trade tensions.
Author  FXStreet
Feb 05, Wed
The Australian Dollar (AUD) edges lower against the US Dollar (USD) amid an increased risk aversion following rising fears over US-China trade tensions.
placeholder
USD/CAD holds positive ground near 1.4400 ahead of BoC, Fed rate decisionsThe USD/CAD pair trades with mild gains around 1.4400 during the early Asian session on Wednesday.
Author  FXStreet
Jan 29, Wed
The USD/CAD pair trades with mild gains around 1.4400 during the early Asian session on Wednesday.
Real-time Quote