3 months ago

Canadian Dollar Strengthened on Tuesday, Markets Eye US Jobs Report

Image: A representation of the USD/CAD pair.

In Tuesday’s session USD/CAD has moved lower. In the North American session, the pair was trading at 1.3257, down 0.33% on the day

On the release front, no events are to take place until Thursday. Still, in the U.S., JOLTS Jobs Openings is expected to slow to 6.84 million, according to Investing.com.

Markets Eye US Jobs Report

Today, the U.S. Bureau of Labor Statistics releases CPI reports. The Consumer Price Index measures the price of goods and services from the consumer’s perspective. A higher than expected reading would be seen as positive for the USD. The data released in January showed that the CPI was -0.1%, while the CPI to be released today is forecasted by Investing.com at -0.1%.


 

Image: U.S. CPI January 2014 – January 2019.

Source: Investing.com.

In 2018, the Federal Reserve hit the rate trigger four times, as an aggressive response to a red-hot U.S. economy. However, the global trade war and slower U.S. growth has resulted in the Fed lowering its forecast to two hikes in 2019. What may be overly optimistic are the forecasts made by the futures market that suggest no rate hikes will be put into action until 2020, according to MarketPulse.com.

On Monday, Fed President Michelle Bowman said that she was satisfied with current monetary policy, and that the labour market and inflation levels had put the economy in a “good place”.

Canada’s labour market ended the week with an exclamation mark, as the economy created 66.8 thousand jobs in January, crushing the estimate of 6.5 thousand. 

It was the second banner reading in three months. Still, the Bank of Canada is not expected to raise rates at its next meeting on March 6.  Weak oil prices are weighing on inflation, and the Canadian dollar is down 1.1% in February. Like the Fed, the BoC has become more dovish, after raising rates three times in 2018.

Sources: MarketPulse.com and Investing.com.

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