Canadian Dollar steadies after job losses, eyes on US CPI next week

• The Canadian Dollar caught an early decline on Friday, but Greenback declines are squaring Loonie positioning.
• Canada shed jobs in July after the pace of hiring declined faster than expected.
• Coming up next week: US CPI inflation figures to dominate market sentiment early.

The Canadian Dollar (CAD) stumbled on Friday, falling against the US Dollar (USD) before broad-market Greenback sentiment overtook Loonie positioning to chip away at the USD's late-week strength. Canadian jobs data came in far below expectations, kicking the legs out from beneath Loonie bulls before general market sentiment continued forcing the US Dollar lower and giving the CAD a mulligan on souring jobs data.

Meaningful Canadian economic data is functionally absent from the economic release calendar next week, leaving global Greenback positioning in the driver's seat once again. Another interest rate cut at the Bank of Canada's (BoC) next interest rate decision is now a foregone conclusion as job creation dries up, but Monday's upcoming US Consumer Price Index (CPI) inflation data will be the key datapoint next week and could throw a very large wrench into markets that are hoping for a continued easing in inflation pressures.

Daily digest market movers: Canadian Dollar moves in either direction remain temporary

• The Canadian Dollar tumbled before recovering ground on Friday, keeping USD/CAD hobbled near 1.3750.
• Canada lost 40.8K net jobs in July, shattering expectations of a thinner slowdown and taking a large chunk out of the previous month's 83.1K upswing.
• A sharp contraction in net Canadian jobs has pinned expectations of another rate cut at the BoC's next rate call on September 17.
• The BoC's upcoming interest rate decision will be entirely eclipsed by the Federal Reserve (Fed), which makes its next interest rate decision on the same day.
• Key US CPI inflation data is due next week, and will draw plenty of attention as investors hope that inflation progress will slowly grind ahead.

Canadian Dollar price forecast

After some back-and-forth with the US Dollar, the Canadian Dollar is poised to end the week close to where it started. USD/CAD is now hamstrung along the 50-day Exponential Moving Average (EMA) near 1.3745, with further technical support baked in at the 1.3700 handle. CAD gained a scant 0.26% against the US Dollar this week, but meaningful bullish momentum behind the Loonie remains absent.

USD/CAD daily chart