- The USD/CAD pair traded in a tight range ahead of the US NFP report.
- The Fed Chair said that the US economy was more resilient than in September.
- Private employers added 146,000 jobs in November.
The USD/CAD forecast shows a tight range as market participants remain cautious ahead of the US nonfarm payrolls report. Meanwhile, upbeat data in Canada failed to change the outlook for Bank of Canada rate cuts.
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The USD/CAD pair traded in a tight range on Thursday amid caution ahead of the crucial US nonfarm payrolls report. Traders preferred to stay on the sidelines, avoiding large positions. The thin trading continued even after Powell’s speech on Wednesday.
The Fed Chair said that the US economy was more resilient than in September. Therefore, the central bank might prefer a more cautious approach to rate cuts. Markets have already priced in such an outcome.
Nevertheless, there is an over 70% chance of a Fed rate cut in December. Meanwhile, the greenback remained steady despite downbeat economic data. The ADP employment report revealed that private employers added 146,000 jobs, down from the previous addition of 184,000.
However, the decline came near economists’ forecasts. Meanwhile, a separate report revealed that business activity in the US services sector dropped more than expected. The ISM PMI came in at 52.1, well below the forecast of 55.7.
However, all focus remains on Friday’s nonfarm payrolls report, which will shape the outlook for Fed rate cuts. Economists predict 195,000 new jobs in November and an unemployment rate of 4.2%. On the other hand, data in Canada showed that the services sector expanded in November, with the PMI jumping to 51.2 from 50.4. Nevertheless, traders still price a 50% chance of a 50-bps BoC rate cut in December.
USD/CAD key events today
USD/CAD technical forecast: Wobbling around 30-SMA
On the technical side, the USD/CAD price trades above the 30-SMA with the RSI above 50, supporting a bullish bias. Bulls took control after making an engulfing candle near a strong support trendline. However, since then, the price started trading in a tight range, and price action showed indecision.
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A strong bullish catalyst will allow the price to retest the 1.4150 resistance level. Otherwise, it might break below the SMA to revisit the trendline. If the price stays above the trendline, the bullish bias will remain. Meanwhile, a break below will signal a reversal.
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