Ella 
USD/CAD was weak in early European trading on Friday. USD/CAD still faces resistance at the 50-day exponential moving average near 1.3600. As of press time, USD/CAD was trading at 1.3577, down 0.13% on the day.
Federal Reserve Chairman Jerome Powell believes that optimistic supply-side developments will help reduce inflationary pressures. This view is supported by a surge in productivity growth in the third quarter of 2023, which led to a sharp decline in unit labor costs. The market believes that the Fed’s current restrictive monetary policy will squeeze demand and ensure that inflation continues to decline in the near term. Therefore, the market believes that the Fed’s interest rate hike cycle is over.
Initial claims for unemployment benefits in the United States rose to 220,000 on Thursday from 218,000 the previous week, while continuing claims fell to 1.861 million from 1.925 million last week. Market participants will take more fresh impetus from Friday’s U.S. employment data.
In terms of the Canadian dollar, the Bank of Canada will remain on hold in December while leaving the door open for further interest rate hikes. The Bank of Canada said further signs that monetary policy is slowing spending and easing price pressures have prompted the Bank of Canada to keep its policy rate at 5% and continue to normalize the central bank’s balance sheet. The Bank of Canada expressed concern about risks to the inflation outlook and was prepared to further raise policy rates if necessary.
Meanwhile, a rebound in oil prices could boost the commodity-linked Canadian dollar as Canada is a major oil exporter to the United States.
Traders will be closely watching U.S. nonfarm payrolls data, which is expected to increase by 180,000 in November. Additionally, the unemployment rate is expected to hold steady at 3.9%. These events can trigger market volatility and provide direction for the USD/CAD pair.
