Image by Allange from Pixabay

The Canadian Dollar (CAD) tested fresh eight-month peaks against the US Dollar (USD) on Thursday. Loonie gains remain limited, however: US Nonfarm Payrolls (NFP) jobs figures will be closing out the trading week, and investors are growing apprehensive about labor and economic growth factors on both sides of the 49th parallel.

The Bank of Canada (BoC) held interest rates flat this week after seven consecutive rate cuts, helping to boost the Loonie. However, topside momentum remains limited as Canadian businesses grow increasingly wary of decaying economic conditions.

Daily digest market movers: Canadian Dollar tests higher ground as Greenback swirls

• The Canadian Dollar briefly tested fresh eight-month highs against the US Dollar, sending USD/CAD below 1.3650 for the first time since October of last year.
• Market sentiment remains tight as investors head into Friday’s US NFP labor data release window.
• US NFP net job gains for May are expected to slow to 130K versus the previous print of 177K.
• Investor sentiment remains further constrained as traders watch US President Donald Trump and former Trump taskmaster Elon Musk go to loggerheads on social media.
• Canadian labor data is due to get eclipsed on Friday by NFP’s long shadow, however that may be for the best for Loonie longs: Canadian Net Change in Employment is expected to contract by 15K net jobs in May, wiping out April’s scant 7.4K growth.

Canadian Dollar price forecast

The Canadian Dollar has gained ground or held steady against the US Dollar for all but two of the last 16 consecutive trading sessions, pushing USD/CAD into fresh multi-month lows below 1.3650. The pair has fallen 2.72% top-to-bottom from May’s swing high into 1.4015, and long-run downward trendline channels are keeping price action locked on bearish rails.

USD/CAD daily chart

(Click on image to enlarge)

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