GBP/USD U.S. Jobs Data May Seal the Deal on June Rate Hike and Boost Dollar

The US dollar trended higher versus the Canadian dollar for the third straight session on Thursday. The US dollar Canadian dollar exchange rate has gained over 0.8% across the week so far. The pair is edging lower in early trade on Friday.

The dollar trended broadly lower on Thursday, although not versus the Canadian dollar, amid softer inflation figures and as the investors continued to digest the 25-basis point interest rate cut by the Federal Reserve earlier in the week.

Investors will now turn their attention towards he US non-farm payroll data from the US labour department. The jobs report is the most keenly watched macroeconomic data release across the month. Analysts predict that 85,000 jobs were created in the US in October. This is down from the 135,000 that were created in September. Analysts also expect unemployment to tick higher by 0.1% to 3.6% and average hourly wages to grow 0.3% on the month or 3% in an annual basis. This would be up slightly from 2.9% in September year on year.

Investors will be watching closely for any sign of weakness in the US labour market, which has so far remained resilient even as the US manufacturing sector has slumped. Hints of weakness could raise investor fears that the slowing manufacturing sector is spreading into other areas of the economy.

Canadian Expands At Softer Pace

The mood towards the Canadian dollar soured following the Bank of Canada’s monetary policy announcement earlier in the week. Whilst the central bank kept rates on hold, they also unexpectedly downgraded the domestic growth outlook.

Canadian GDP data supported the moved by the BoC to downgrade growth. The Canadian economy expanded at a softer pace than what analysts had been predicting in the third quarter. The Canadian economy grew at 1.3% year on year, missing the 1.4% growth that analysts had pencilled in.

Adding to the Canadian dollar’s woes, the price of oil declined a further 1.9% on Thursday, adding to losses of 1.5% on Wednesday. A weaker oil price weighs on the value of the Canadian dollar versus the US dollar simply because when oil prices are low the amount of US dollars that Canadian earns on each barrel of oil it exports is lower.

Today investors will be looking ahead to Canadian manufacturing numbers.

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