USD/CAD Slips to 1.3655 Ahead of Canadian Jobs Report Amid Fed Rate Cut Uncertainty

USD/CAD Slips to 1.3655 Ahead of Canadian Jobs Report Amid Fed Rate Cut Uncertainty

USD Weakens on Rate Cut Expectations; CAD Traders Eye Jobs Data

The USD/CAD currency pair edged lower to around 1.3655 during early Asian trading on Friday, continuing its downward movement as the US Dollar (USD) lost ground against the Canadian Dollar (CAD). The pullback comes just ahead of Canada’s June jobs report, scheduled for release later today, which is expected to play a key role in shaping short-term CAD direction.

Fed Minutes Signal Dovish Bias, But Division Remains

The Federal Open Market Committee (FOMC) minutes from the June 17–18 meeting, released on Wednesday, revealed growing support for interest rate cuts in 2025, with most participants agreeing that some reduction in the Fed Funds rate may be warranted. However, the "dot plot" showed divided opinions on the timing and size of potential cuts.

Despite acknowledging recent tariff-induced price pressures, Fed members largely viewed them as temporary or modest, downplaying the risk of sustained inflation. The market now anticipates two rate cuts this year, with more easing likely in 2026 and beyond.

Trade Uncertainty Adds Pressure to USD

Adding to the USD pressure, President Donald Trump signed an executive order this week imposing a 50% tariff on US copper imports, effective August 1. This move has raised concerns over the US-Canada trade deal, which Canada hopes to finalize by July 21.

As Canada remains one of the largest copper exporters to the US, this tariff could strain bilateral trade relations. A breakdown in trade talks may act as a tailwind for the USD, due to risk-off flows, but also a potential headwind for CAD, especially if Canadian exports take a hit.

Key Levels to Watch

• Support: 1.3620
• Resistance: 1.3700
• Event Risk: Canada’s Employment Change and Unemployment Rate (due later Friday)

Outlook: Cautious Trading Ahead of Key Jobs Data

As traders brace for Canada's employment figures, short-term volatility in USD/CAD is likely. A strong jobs report could strengthen the CAD further, pushing USD/CAD below 1.3600, while a weaker-than-expected release may halt the pair's decline.

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