CAD faces pressure amid rate decision and oil prices

Key Movers

e US Dollar Index (DXY) dipped below 104 this morning to trade around 103.880 as investors eagerly anticipated the monthly jobs report. This report is expected to shed light on the current state of the US labour market. Forecasts project an increase of 170,000 jobs in non-farm payrolls for November. There are also expectations for the jobless rate to hold steady at a 22-month high of 3.9%, and wage growth to slow to 4%, marking its lowest point since June 2021. This week’s data indicated a slowdown in the labour market, with initial jobless claims rising less than expected, increased job cuts announced by US employers in November, and job openings hitting their lowest level since March 2021.

The euro continued its descent as it traded near 1.07830, reaching its lowest point since mid-November. This decline was propelled by dovish statements from the European Central Bank (ECB) conservative Isabel Schnabel, who reinforced expectations that the ECB might accelerate rate cuts. Schnabel’s remarks to Reuters suggested that further hikes were deemed “rather unlikely” following a recent Consumer Price Index (CPI) report which showed a dip in the inflation rate to 2.4% in November. This marked the lowest figure in two years, falling below the market consensus of 2.7%.

The pound attempted to recover in the early European session, bouncing back from session lows at 1.2540, yet it faced resistance around 1.2600. Despite its efforts, the sterling continued to be dominated by a bearish outlook. The prevailing negative market sentiment, fueled by heightened concerns about a global economic slowdown in 2024, bolstered the safe-haven status of the USD. Governor Bailey of the Bank of England (BoE) emphasized the necessity of maintaining current interest rates for an extended period.