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Both Canada and the U.S. are printing labor market reports today!

How will the releases affect USD/CAD’s recent upswing?

Before we talk setups, check out the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

“High degree of uncertainty” over near-term outlook kept BOE from raising rates as markets expected

OPEC+ agrees to stick to 400K barrel/month oil production plan, defying U.S. pressure

Australia’s AiG services PMI improves from 45.7 to 47.6, details mixed

RBA reiterates 2024 rate hike schedule

Japan’s household spending down 1.9% in September

Global share rally pauses in Asia as China property weighs

German industrial production unexpectedly drops by 1.1% in September

UK house prices hit fourth straight monthly increases, reaches record highs in September

Upcoming Potential Catalysts on the Forex Economic Calendar:

Italy’s retail sales at 9:00 am GMT
Eurozone’s retail sales at 9:00 am GMT
U.S. NFP reports at 12:30 pm GMT
Canada’s labor market data at 12:30 pm GMT
Canada’s IVEY PMI at 2:00 pm GMT
U.S. House of Representatives expected to vote on social spending, infrastructure bill

If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.

What to Watch: USD/CAD

USD/CAD 1-hour Forex Chart
USD/CAD 1-hour Forex Chart

The major currencies were stuck in tight ranges as traders waited for the U.S. non-farm payrolls (NFP) release.

Uncle Sam won’t be the only one printing labor market data though! Canada will also publish its employment numbers for the month of October.

Traders see the U.S. gaining around 450,000 new private payrolls for the month, with participation rate reflecting the return to normalcy for more states.

Meanwhile, Canada may see another 42,000 jobs added in October with the jobless rate seen dipping from 6.9% to 6.8%.

If the U.S. prints hundreds of thousands of additional jobs and Canada shows a slower pace of job additions, then USD/CAD could extend its recent upswing.

USD/CAD’s bullish moving average crossover can gain momentum and propel the dollar to the 1.2500 – 1.2580 area close to the 50% and 61.8% Fib retracement levels.

I’m not discounting a weak trading session for the dollar, however.

If the NFP reports disappoint, Canada’s data surpass market expectations, or if traders believe that the Bank of Canada (BOC) will have reason to be more hawkish than the Fed in the coming months, then USD/CAD may find resistance from its current levels and head back to its October lows.