USD/CAD – BoC Holds, positive US economic figures ahead of Friday’s jobs report

  • First BoC rate cut priced in for as early as March
  • US ADP employment increases 103k in November (131k expected, 106k previously)
  • USDCAD bounces off key moving average

BoC remains committed to hiking if necessary, markets price in March cut

The Bank of Canada continued to insist it remains prepared to raise rates again if needed despite acknowledging that inflationary pressures have eased and higher rates are weighing on the economy and demand. Markets continue to focus on the latter, pricing in a greater than 50% chance of a rate cut in March which will be quite a sharp u-turn from the central bank. I do wonder whether others will take a similar approach next week which leaves very little time to pivot if a March cut is realistic.

Further evidence of cooling US labour market pressures

US stocks are off to a decent start again on Wednesday, buoyed by data ahead of the open that pointed to further weakness in the jobs market and additional disinflationary pressures.

There’s no getting around the fact that the data at the end of the week – US jobs report – is the one everyone is eagerly waiting for but the releases in the interim both fill and void and help to build the case that the economy is a little softer and price pressures are subsiding.

In this case, ADP reported employment gains of 103,000 from a downwardly revised 106,000 in October. As ever, this data should be taken with a pinch of salt when it comes to Friday’s NFP and has at times been a wildly unreliable indicator for it, but it still suggests employment is trending lower.

Revised data on productivity and unit labor costs also surprised positively, with the former exceeding expectations and the latter falling short. This suggests we’re seeing further disinflationary pressures building in the economy which will further enable the Fed to adopt a far less hawkish approach next week.

USDCAD bounces back

We’ve seen a rebound over the last couple of sessions after running into support around the 200/233-day simple moving average band. It’s stabilised after the BoC decision and resistance may now lie around the 55/89-day SMA band.


Source – OANDA on Trading View

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam