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Dollar firms as ADP, Bank of Canada eyed for FX direction

Forecast calls for ADP private payrolls of 48K, after 44K the prior month, with any surprise also affecting rate expectations for the Federal Reserve.

Reported · Written up by our desk · Major Pairs

The US dollar is extending its rebound from a prior period of weakness, gaining ground against major currencies as traders look ahead to key catalysts. Market focus centers on the preliminary ADP employment figures for the United States, where forecasts call for private payrolls to rise by 48K after an increase of 44K in the prior month, and a meaningful miss versus expectations could raise dollar volatility and shift views on the Federal Reserve’s policy path, Action Forex reports.

Geopolitical risk is also in play, with tensions surrounding Iran supporting demand for safe havens and adding volatility to the oil market. That backdrop could bolster safe haven demand for assets such as the yen, while also influencing oil-linked moves that can affect the Canadian dollar.

For USD/CAD, the Bank of Canada decision is the main event, with the policy rate expected to remain unchanged at 2.25%. Traders will look to the statement and press conference, since a more dovish tone could add pressure on the Canadian dollar, while oil moves driven by EIA crude inventory data and Iran-related tensions can further feed into the pair.

Action Forex also flags near-term technical levels and scenarios for major pairs, noting USD/JPY has tested the 159.40 to 159.80 support area and was pushed above 160.00 by buyers. The update also points to USD/CAD trading in a 1.3840 to 1.3910 range, where a sustained break above 1.3910 could open gains toward 1.3960 to 1.4000, while a move below 1.3840 could bring a retest of recent lows around 1.3730 to 1.3780.

Latest closeWTI crude $90.79 ▲5.9%|USD/JPY 160.21 ▲0.3%

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