Investing.com – The Canadian dollar was little changed against its US counterpart on Thursday, as traders await tomorrow’s domestic employment data to gauge the Bank of Canada’s policy outlook.
While the BoC has struck a hawkish note in recent days, reiterating that it remains worried about persistent inflation, tomorrow’s labour market report will provide further insights on whether the BoC has room to keep rates higher for much longer.
"The Canadian dollar is largely bouncing around in a narrow range," noted Rahim Madhavji, president at KnightsbridgeFX.com.
"All eyes in Canada are on the Canadian employment report that's coming up tomorrow ... If the jobs data is to the upside, we could see the loonie gain quite a bit of strength off of that."
The employment report is expected to show that the Canadian economy added 15,000 jobs in January. The unemployment rate meanwhile is expected to tick higher to 5.9% from 5.8% in the previous month.
The US dollar meanwhile edged higher against a basket of major currencies as initial jobless claims skewed positive, and a slew of recent commentary from the Fed, continue to push the timeline for rate cuts back.
On a technical level for the pair, analysts at OANDA note that “The recovery in USDCAD appears to have run into trouble in recent weeks near 1.3550 where it has repeatedly experienced resistance. This falls around the 50% Fibonacci retracement level and within the 55/89-day simple moving average band.”
“With the MACD now displaying a divergence with the price, it’s possible that what may be a correction has run out of momentum. A move below the end of January lows could further support this".