The USD/CAD pair is trading around 1.3685 in Monday’s early European session. The US Non-Farm Payrolls (NFP) rose to 175,000 in April from 315,000 in March, while the Unemployment Rate increased to 3.9% in April from 3.8% previously. The Bank of Canada (BoC) governor hinted at possible rate cuts as he sees inflation moving in the right direction.
The Canadian Dollar (CAD) is gaining strength against the US Dollar (USD) due to rising crude oil prices, which is putting pressure on USD/CAD. This week, Canada’s Ivey Purchasing Managers Index (PMI) and employment data for April will provide insights into the economic outlook and inflation trends. Additionally, market watchers will pay attention to speeches by Fed officials Thomas Barkin and John Williams.
Weak US data on Friday raised expectations of a Fed rate cut in September. The US added fewer jobs than expected in April, with the Unemployment Rate and Average Hourly Earnings also showing negative trends. Financial markets are now pricing in a higher likelihood of a September rate cut by the Fed.
BoC governor Macklem’s comments suggest a potential rate cut in the near future, but not as aggressively as some may have hoped. Traders anticipate the BoC to ease monetary policy in June, which could impact the CAD’s strength. The recovery of oil prices is also supporting the CAD due to Canada’s status as a major oil exporter to the US.