USD/CAD at the mercy of US jobs data this week

• USD/CAD consolidates ahead of critical US jobs data. 
• Markets will now assess the economic backdrop with respect to Fed rate hike timings.

USD/CAD is flat on the day and in the consolidation of the prior daily bearish impulse after a being outcome from the Federal reserve that weighed on the greenback in what was giving back territory gained earlier in the week. Investors weighed the Federal Reserve's move to taper its bond-buying program, with CAD recovering from an earlier three-week low which it hit as oil prices tumbled.

There was a limited reaction across the G10FX space following the Fed meeting after it said it will begin trimming its monthly bond purchases in November with plans to end them in 2022, but held to its belief that high inflation would prove "transitory" and likely not require a fast rise in interest rates.

All eyes now turn to data events

However, as for liftoff, it will now depend on how the economy evolves, so US data is going to be critical and volatility could be sparked as soon as today with JOLTS ahead of Friday's all-important Nonfarm Payrolls. 

''Officials have become more concerned about the risk that the pickup in inflation will turn out to be less "transitory" than hoped, raising the risk of an earlier-than-anticipated start to rate hikes, but officials still think inflation will moderate as COVID fallout wanes,'' analysts at TD Securities explained. 

''We continue to forecast no rate hikes until the end of 2023, but the exact timing will inevitably depend on how the outlook evolves as data are reported. We expect a fading of fiscal stimulus to the point of policy turning contractionary to result in momentum be down enough by the middle of next year to delay action.''

Meanwhile, as a potential prelude to Friday's jobs data, the US ADP private employment report surprised to the upside in October. The series rallied to 571k after registering a 523k gain in September (revised lower from 568k).