Photo by Michelle Spollen on Unsplash
 

The USD/CAD pair trades in a tight range around 1.3950 during the Asian trading session on Friday. The Loonie pair wobbles inside Thursday’s trading range as investors await the Canadian labour market data for November, which will be published at 13:30 GMT.

Investors will pay close attention to the Canadian employment data to get cues about whether the Bank of Canada (BoC) will extend its monetary easing campaign.

The Canadian employment report is expected to show that there were no fresh hiring and lay-offs, following the creation of 66.6K jobs in October. The Unemployment Rate is expected to come in higher at 7% from the prior release of 6.9%.

Signs of weakening Canadian job market conditions would prompt the need of an interest rate cut by the BoC in its monetary policy meeting on Wednesday.

Meanwhile, the US Dollar (USD) trades cautiously amid firm expectations that the Federal Reserve (Fed) will cut interest rates in its monetary policy meeting next week. At the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, strives to hold its fresh five-week low around 98.75 posted on Thursday.

According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points (bps) to 3.50%-3.75% in the December policy meeting is 87%.

Firm Fed dovish speculation is backed by deteriorating United States (US) labor market conditions, and expectations that inflation driven by President Donald Trump’s promoted tariff policy is not persistent in nature.

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