USD/CAD sits tight near 1.3450 ahead of key jobs reports

• USD/CAD bulls come up for air ahead of US NFP.
• The US Dollar is paring back shorts into the holidays. 

USD/CAD is flat on Wednesday and had traveled between a low of 1.3423 and 1.3484 as the CAD consolidates this week´s gains as investors turned their attention to the release of US and Canadian employment data. 

After touching its weakest intraday level since Feb. 16 at 1.3406, the pair rallied as investors pared back some of the short positions on profit-taking ahead of Friday´s showdown event. However, the US Dollar initially fell to mark a fresh bear cycle low on Wednesday but has since recovered the best part of the losses made on Tuesday´s sell-off and is now reaching back towards 102.00 DXY.

Meanwhile, a report today that showed US private sector employers added 145,000 jobs in March, well under expectations for a rise of 210,000 is casting a dark cloud over the Greenback. /The ADP National Employment report showed US private employers hired fewer workers than expected in March, suggesting a cooling labor market. Private employment increased by 145,000 jobs last month, while economists polled by Reuters had forecast private employment increasing by 200,000. In other data, the United States services industry was also shown to have slowed more than expected in March as the measure of prices paid by services businesses fell to the lowest in nearly three years. The ISM's Non-Manufacturing index dropped to 51.2 in March from 55.1 in February. The services sector's employment indicator sliding as well to 45.8 from 47.6 in February.

For Canada, data on Wednesday showed that Canada posted a smaller-than-expected trade surplus of C$422 million ($313 million) in February, as both exports and imports recorded widespread declines. Meanwhile, the price of oil , one of Canada's major exports, was under pressure with WTI down some 0.8% into the close but off the lowest point of the day down at $79.77bbls. Oil has been weighed by worsening economic prospects against expectations of US crude inventory declines and plans by OPEC+ producers to reduce output.

Looking ahead, Canada's employment report for March is due on Thursday. This is expected to show the economy added 12,000 jobs. This data falls ahead of Friday´s US Nonfarm Payrolls report whereby traders who are in on Good Friday will be looking for any confirmation that the labor market is cooling, a major requisite in the Federal Reserve's fight to curb inflation. Particular attention will be paid to the Unemployment Rate in this regard. 

Analysts at Brown Brothers Harriman said the following with regard to the forthcoming jobs data:

´´The consensus for Nonfarm Payrolls this Friday stands at 240k vs. 311k in February, while the unemployment rate is seen steady at 3.6%.  Average hourly earnings are expected to slow to 4.3% y/y vs. 4.6% in February.  It's worth noting that the data will come on Good Friday.  With markets likely to be very thin, we could get some outsize movements from the numbers, whether good or bad. ´´