The USD/CAD pair trades in a narrow range around the 1.3770–1.3775 area during the Asian session on Tuesday, with price action remaining subdued as the US Dollar stays under pressure ahead of the delayed US Nonfarm Payrolls (NFP) combined report for October and November, due at 13:30 GMT.
At the time of writing, the US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, hovers near an eight-week low around 98.15, limiting upside momentum in USD/CAD.
Investors are closely watching the US NFP data for fresh insight into the state of labor market demand. The release is expected to play a key role in shaping near-term expectations for Federal Reserve policy, particularly after the central bank delivered a total of 75 basis points in rate cuts this year, bringing the benchmark rate to 3.50%–3.75%, largely in response to signs of labor market softening. Economists forecast the US Unemployment Rate to remain unchanged at 4.4% in November.
Beyond the jobs report, markets will also digest US Retail Sales figures for November and the preliminary S&P Global Purchasing Managers’ Index (PMI) readings for December. Monthly Retail Sales are expected to rise by a modest 0.2%, offering additional clues on the resilience of consumer demand.
On the Canadian Dollar side, CAD trades broadly steady after Canada’s November Consumer Price Index data pointed to stable inflation trends. Released on Monday, the report showed headline CPI rising at an annual pace of 2.2%, below market expectations of 2.4%. The Bank of Canada’s core CPI measure, which excludes the eight most volatile components, increased at a steady 2.9%.
In its monetary policy statement last week, the Bank of Canada noted that underlying inflation is running around 2.5% and is expected to remain broadly close to the 2% target, as economic slack is likely to offset cost pressures stemming from trade reconfiguration.
