• Canada’s unemployment rate rose to an over 2-year high of 6.4%.

• Chances of a BoC cut in July rose from 40% to 56%.

• Investors await Powell’s speech to see where policymakers stand regarding rate cuts.

The USD/CAD outlook is slightly bullish as the Canadian dollar remains weak after last week’s dismal jobs report. Meanwhile, investors are gearing up for Powell’s testimony, which might contain clues about the Fed’s policy outlook.

The Canadian dollar fell sharply on Friday after Canada’s unemployment rate rose to an over 2-year high of 6.4%. This was a sign that more people were losing jobs. At the same time, the economy lost 1,400 jobs in June. Meanwhile, analysts had expected an increase of 22,500 jobs.

Economists worry that the poor jobs report could indicate a recession, pushing the Bank of Canada to cut interest rates. After the report, chances of a BoC cut in July rose from 40% to 56%.

On the other hand, the dollar was also fragile after Friday’s employment figures. Although not as bad as Canada’s, the US labor market has also softened. The unemployment rate rose from 4.0% to 4.1%, raising the likelihood of a Fed cut in September to 76%.

Investors are awaiting Powell’s speech to see where policymakers stand regarding rate cuts. A dovish speech could increase bets for a September cut. However, the Fed chair might emphasize the need for more evidence, especially with the upcoming inflation report. If price pressures ease, policymakers will be more confident that inflation will reach the central bank’s target. Therefore, they might assume a more dovish tone.

USD/CAD key events today

• Fed Chair Powell Testifies

USD/CAD technical outlook: Bulls face solid resistance barrier

On the technical side, the USD/CAD price has risen to the 30-SMA resistance after revisiting its bearish channel support. Moreover, the bias is still bearish, with the price below the SMA and the RSI slightly under 50. Bulls are currently challenging the 30-SMA resistance.

If the price breaks above the SMA, it will meet the 1.3650 key resistance level. A break above this would allow USD/CAD to revisit its channel resistance line. However, if bulls are not strong enough to push the price above the current resistance zone, it will likely fall back to the channel support and the 1.3600 key level.

https://www.forexcrunch.com/blog/2024/07/09/usd-cad-outlook-weak-jobs-data-keeps-cad-under-pressure/