Canadian Dollar sinks after NFP revisions drive US Dollar higher

• The Canadian Dollar shed nearly 0.3% against the Greenback on Tuesday.
• US data is driving the broader market as NFP revisions stoke Fed rate cut hopes.
• The US economy added nearly a million jobs fewer than expected during the review period.

The Canadian Dollar (CAD) backslid on Tuesday, driven lower by a general improvement in US Dollar (USD) flows. The Loonie is down over one-quarter of one percent against the Greenback, with the US Dollar Index (DXY) climbing nearly 0.3% on the day for comparison.

US economic data continues to be the main driver behind USD/CAD moves. US Nonfarm Payrolls (NFP) saw their first annual revision this week, with the US economy added around 900K fewer jobs than initially predicted through the revision period that runs March 2024 to March 2025. The final revisions for the annual review window won't be available until February 2026, but markets believe the Federal Reserve (Fed) has seen enough damage to the US labor market to begin cutting interest rates at their next interest rate call next week.

Daily digest market movers: Canadian Dollar recedes amid rising Fed rate cut bets

• The Canadian Dollar shed 0.3% against the US Dollar on Tuesday.
• Despite remaining within recent technical levels, the Loonie is down over 0.8% against the Greenback from its one-month highs.
• US NFP revisions showed the US economy added 911K fewer jobs than initially forecast in the March-to-March revision window, and further lost hirings could be on the cards as the review period doesn't include the post-tariff announcement economy.
• Some over-eager market participants are betting that the Fed could deliver a jumbo rate cut on September 17, but a quarter-point rate cut at the minimum appears to be a sure thing.
• This week's US Consumer Price Index (CPI) inflation print could still stymie Fed rate operations. Headline annual US CPI inflation continues to float well above the Fed's 2% annual inflation target. Headline CPI inflation for the year ended in August is expected to tick up to 2.9% YoY on Thursday.

Canadian Dollar price forecast: CAD gives up further ground

USD/CAD has risen firmly back above the 1.3800 handle as the Greenback gains further ground against the Loonie. The Canadian Dollar has fallen 0.85% against the US Dollar since its latest August peak that pushed USD/CAD down to 1.3725, and the pair is now heading into steep technical resistance at the 200-day Exponential Moving Average (EMA) near 1.3870.

USD/CAD daily chart