The Canadian Dollar had another volatile day on Friday. The USD/CAD saw significant gains against the USD on Thursday, touching 1.3480, after Fed Chairman Powell suggested that the Fed still anticipates cutting rates this year despite the strong US economy. Then, on Friday morning, the combination of a spectacular US employment report and a weak Canadian employment report sent the Canadian dollar on a nosedive versus the US Dollar, dropping all the way down to the 1.3640 mark.

According to Statistics Canada, the Canadian economy lost 2,200 jobs last month, significantly missing the 25,000 jobs that were expected to be added. In contrast, the US economy added 303,000 jobs, far exceeding the expectations of only 200,000 jobs. Investors saw this as a clear indication that the Bank of Canada is now one step closer to starting its interest rate cut cycle, while the Fed has the luxury of waiting.

The Canadian dollar managed to claw back some of its losses on Friday after the release of Canada’s Ivey PMI, which measures month-to-month variation in economic activity, jumped to a one-year high in March.

Overall, the Canadian dollar appears to be in a precarious position, and the Bank of Canada may be forced to move in June, ahead of the Federal Reserve. In the short term, we foresee more weakness for the Canadian dollar.

The Canadian dollar is currently trading at 1.3584 CAD against the US Dollar.