The Canadian dollar extended its losing streak on Friday, marking a fifth straight day of declines against the US dollar after employment data from both Canada and the United States underscored the economic toll of trade tensions. At the same time, markets ramped up bets on central bank rate cuts on both sides of the border.
Jobs data disappoints in Canada and US
Canada shed 65,500 jobs in August, a sharp miss compared with forecasts for a modest gain of 7,500. South of the border, US Nonfarm Payrolls (NFP) showed only 22,000 new positions created, well below the 75,000 expected. The twin disappointments rattled market sentiment, triggering risk-off flows that lifted the US dollar across the board.
As a result, USD/CAD jumped above 1.3840, with the loonie tumbling nearly 0.7% intraday and extending its slide for the week.
Market focus shifts to US inflation data
With no major Canadian releases on next week’s calendar, traders will turn to US inflation figures for direction. The Consumer Price Index (CPI) will be closely watched as the Federal Reserve weighs its next policy move.
Technical outlook: USD/CAD holds firm above key averages
Friday’s reversal drove USD/CAD back toward the 1.3850 area, bouncing off support at the 50-day Exponential Moving Average (EMA) near 1.3780. Current momentum points to a potential retest of the 200-day EMA around 1.3870. A break above could open the path to the recent swing high at 1.3925.
