The USD/CAD currency pair extended losses to a 2-week low of 1.3517 on Wednesday ahead of US jobs and inflation data prints, which may provide fresh clues over the Fed’s monetary policy trajectory.
Employers in all sectors of the US economy, excluding farming, probably added 70,000 job positions in January, according to market consensus, following a job growth of 50,000 in December.
And, the unemployment rate probably remained steady at 4.4% in January.
San Francisco Federal Reserve President Mary Daly said last week that one or two additional interest rate cuts might be required to counteract weakness in the US labor market.
At the same time, US December retail sales fell short of market consensus, while indicating a slowdown in consumer spending and also reinforcing expectations of further policy easing by the Federal Reserve.
Markets are now pricing in a higher probability of three interest rate cuts this year, compared to two a week earlier.
Meanwhile, CAD traders will be paying close attention to the minutes from the Bank of Canada’s January policy meeting.
The BoC kept its benchmark interest rate intact at 2.25% at its January meeting, in line with market expectations.
BoC policy makers said that the current stance remained appropriate given the central bank’s baseline economic outlook.
Governor Tiff Macklem noted that a high level of trade uncertainty made it difficult to project when and in what direction the policy rate might next move.
In its quarterly monetary policy report, the central bank maintained its forecast for modest growth this year and in 2027, while inflation is expected to hover around the 2% target.
The USD/CAD currency pair was last down 0.19% on the day to trade at 1.3524.
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