USD/CAD holds below the 1.3600 barrier ahead of the US NFP data

• USD/CAD loses ground near 1.3577 amid the USD weakness.
• The US weekly Initial Jobless Claims increased 220K vs. 218K prior, Continuing Claims eased from 1.925M to 1.861M.
• Bank of Canada (BoC) held interest rates steady at its December meeting while opening the door for further hikes.
• The US Nonfarm Payrolls and Unemployment Rate will be in the spotlight on Friday.

The USD/CAD pair trades on a negative note during the early European session on Friday. The pair remains capped under the 50-day Exponential Moving Average (EMA) barrier near 1.3600. At press time, USD/CAD is trading at 1.3577, down 0.13% on the day.

The Federal Reserve (Fed) Chair Powell has cited optimistic supply-side developments as contributing to lower inflation pressures. This viewpoint is supported by an upsurge in productivity growth in the third quarter of 2023, which resulted in a substantial drop in unit labor costs. The markets believe the Fed's current restricted monetary policies will squeeze demand and ensure the recent drop in inflation continues. Therefore, the markets believe the Fed is done hiking the cycle.

On Thursday, the weekly US Initial Jobless Claims increased 220K in the week ending December 2 from the previous week of 218K, while the Continuing Claims eased to 1.861M from the previous week of 1.925M. Market players will take more cues from the US employment data on Friday for fresh impetus.

On the Loonie front, the Bank of Canada (BoC) held interest rates steady at its December meeting, while opening the door for further hikes. The central bank stated that further signs that monetary policy is moderating spending and alleviating price pressures prompted the central bank to hold the policy rate at 5% and continue to normalize the bank’s balance sheet. The BoC is concerned about the risks to the inflation outlook and is prepared to hike the policy rate further if needed.

Meanwhile, the recovery of oil prices might boost the commodity-linked Loonie, as the country is the leading oil exporter to the US.

Traders will keep an eye on the US Nonfarm Payrolls, which is expected to add 180K jobs in November. Also, the Unemployment Rate is estimated to remain steady at 3.9%. These events could trigger the volatility in the market and give a clear direction to the USD/CAD pair.