While both the Fed and the BoC are expected to start cutting interest rates sometime this year, some analysts expect the BoC to potentially open the door for a June rate cut due to the rising unemployment rate caused by migration coupled with an inflation cooldown.
The Bank will want to avoid the risk of a potential recession and might adopt a more dovish message at the next meeting if it’s confident enough that inflation is on its way to the 2% target, even though the monetary policy is expected to remain unchanged for now.
If the payroll data prints under expectations in both Canada and the U.S. today, the CAD could weaken against all G10 pairs.
On the H1 chart USD/CAD rejected from the 1.3575 level of resistance and is currently on a correction path. The next resistance level is at 1.3610 and on the downside the support levels are at 1.3520 and 1.3460.