Why Is USD/CAD Gaining Ground? Key Factors Driving the Pair Toward 1.3750 | Canadian Jobs Data in Focus

The tether priceUSD/CAD currency pair is showing renewed strength in early Asian trading hours, climbing toward the 1.3740 level after five consecutive days of declines. This upward movement comes as the US Dollar Index (DXY) regains some footing following positive labor market data from the United States.

Recent economic indicators from the US labor department revealed initial jobless claims for the week ending August 3 came in at 233,000, notably better than both the previous week's revised figure of 250,000 and market expectations of 240,000. This development has helped ease concerns about weakening employment conditions in the world's largest economy, providing fundamental support for the Greenback against its Canadian counterpart.

Market participants continue to price in significant monetary policy easing from the Federal Reserve, though expectations have moderated slightly in recent days. The CME FedWatch Tool currently indicates a 57.5% probability of a 50 basis point rate cut at the September FOMC meeting, down from 83% earlier this week. Such expectations for aggressive policy easing could potentially cap the pair's upside momentum in coming sessions.

Turning to the Canadian dollar, the currency faces its own set of monetary policy considerations. The Bank of Canada's recent 25 basis point reduction in July brought its benchmark rate to 4.5%, with policymakers signaling openness to further adjustments as economic conditions warrant. Several major financial institutions anticipate additional easing totaling 75 basis points before year-end, potentially implemented through quarter-point increments at each remaining policy meeting.

All eyes now turn to Canada's July employment statistics scheduled for release later today. Economists project the addition of 22,500 jobs during the month, with the unemployment rate expected to tick up to 6.5% from June's 6.4% reading. These labor market figures could prove decisive for near-term direction in the USD/CAD pair as traders assess the relative strength of the two North American economies.

The technical picture shows the pair attempting to stabilize after its recent pullback, with immediate resistance seen around the 1.3750 psychological level. A sustained break above this zone could open the door for further recovery toward 1.3800, while failure to hold current levels might see the pair retest support near 1.3700