**USD/CAD Forecast: Dollar Holds Steady Amid Anticipation of U.S. and Canadian Jobs Data**
*Originally reported by Kenny Fisher, ForexCrunch.com*
The USD/CAD currency pair maintained relative stability this week, trading marginally higher as forex traders closely watch labor market data scheduled for release from both the United States and Canada. The greenback is trying to regain its footing following a period of uncertainty related to shifting expectations around Federal Reserve interest rate policy. Meanwhile, the Canadian dollar is responding to fluctuations in oil prices and speculation on the Bank of Canada’s monetary policy path.
In this forecast, we explore USD/CAD’s recent trends, contributing factors influencing currency valuation, and key economic indicators that traders should monitor. The outlook for USD/CAD remains nuanced, affected by both macroeconomic data and central bank communication.
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## Recent USD/CAD Price Action
– The USD/CAD pair traded around the 1.36 level during the last week of August into early September 2025.
– There was limited directional movement, with the pair largely consolidating after recent volatility.
– The U.S. dollar showed strength against a basket of major currencies, buoyed by expectations that the Federal Reserve may delay or moderate rate cuts amid steady economic growth.
– The Canadian dollar remained under pressure from lower global oil prices and weaker-than-expected domestic economic data.
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## Key Drivers of USD/CAD Movement
### 1. U.S. Non-Farm Payrolls (NFP) Report
The U.S. Department of Labor is set to release the monthly Non-Farm Payrolls (NFP) on Friday, a critical event that could shape the near-term trajectory of the U.S. dollar.
– Economists surveyed by Bloomberg are forecasting job creation of approximately 175,000 positions in August 2025.
– The unemployment rate is expected to remain steady at 3.6 percent, indicating a still-tight labor market.
– Average hourly earnings, a key inflation measure, will be closely watched for signs of wage pressure. Forecasts suggest a 0.3 percent month-on-month rise.
– A hotter-than-expected report (above 200,000 jobs and higher wage growth) could fuel expectations that the Fed will maintain a “higher for longer” interest rate policy path.
Should the data surprise to the upside, we may see increased buying pressure for the U.S. dollar, which could take USD/CAD higher toward the 1.3750 resistance zone.
### 2. Canadian Employment Report
Statistics Canada is scheduled to release its own jobs report on the same day as the U.S. releases its NFP.
– The Canadian economy added just 6,000 jobs in July 2025, far below expectations. August data is forecast to show a rebound with an estimated 21,000 new jobs.
– Canada’s unemployment rate ticked higher to 5.6 percent in July and is expected to hold there in August.
– Wage growth and full-time employment indices will be monitored for strength, especially as the Bank of Canada considers another rate hike or a longer pause.
Underwhelming job numbers will likely weigh on the Canadian dollar, potentially exacerbating a push higher for USD/CAD. On the other hand, a strong employment beat could help the loonie recover some lost ground.
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## Federal Reserve Policy Outlook
The Federal Reserve’s interest rate policy remains a dominant narrative in global currency markets.
– As of early September 2025, Fed officials maintain a cautious tone, indicating they are not yet prepared to cut rates despite signs of cooling inflation.
– The latest FOMC statement and accompanying press conference stressed the importance of watching inflation and employment closely.
– Markets are currently pricing in about a 45 percent chance of a 25 basis point cut at the December 2025 meeting, according to the CME FedWatch Tool.
– Key Fed officials such as Chair Jerome Powell and Governor Lisa Cook have issued recent remarks emphasizing data dependence.
If upcoming
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