USD/CAD Creeps Up as Markets Brace for Jobs Reports

The USD/CAD pair edged higher to around 1.4305 late Thursday, supported by slightly firmer US yields. Market caution prevailed due to ongoing uncertainty surrounding US trade policy, particularly regarding potential tariffs on Canada. While a 30-day delay on tariffs was granted, the threat persists, and any renewed trade tensions could weaken the Canadian dollar (Loonie).

Canadian economic data released Thursday also put pressure on the Loonie. The Ivey PMI for January revealed a contraction in economic activity for the first time in five months, with slower employment growth and rising prices.

Looking ahead, Friday’s labour market reports from both the US and Canada will be key. Forecasts suggest a significant drop in Canadian job creation for January compared to December, potentially pushing the unemployment rate slightly higher. In the US, expectations are for a substantial decrease in job growth, though the unemployment rate is projected to remain stable, indicating continued labour market strength.