The USDCAD pair recovered from the intraday lows of 1.36199 and traded at 1.3675 on Tuesday. The pair saw some pressure from the US macroeconomic numbers. Today, the focus is on the Bank of Canada (BoC) interest rate decision.
However, the dollar pared gains against a basket of currencies led by the euro and extended losses against the yen after US jobs fell more than expected in April to the lowest level in more than three years, according to Jobs magazine. and the Labor Turnover Survey or JOLTS report.
Job openings, a measure of labor demand, were down 296,000 to 8.059 million on the last day of April, the lowest level since February 2021.
Market participants had their focus on the JOLTS data, ahead of Friday’s U.S. job report, which is expected to show new jobs created of 185,000 in May, up from 175,000 in April.
The JOLTS report followed data on Monday showing a second straight month of slowdown in manufacturing activity and an unexpected decline in construction spending.
Further, The Bank of Canada policy is due to release later today. The bank has kept its policy rate on hold at 5.0% since July 2023. Now the markets expect the bank to cut its overnight rate by 25 basis points (bps) to 4.75% due to signs of cooling inflation in Canada. That could weight on the currency pair.
The BoC Governor Tiff Macklem said during the last rate meeting that an initial cut in its June meeting would be “within the realm of possibilities.”. If the Canadian central bank decides to lower its borrowing costs in the June meeting, this could widen the divergence of policy rates between the BoC and Fed, which might exert more pressure on the Greenback.
Meanwhile, the rise in crude oil prices could undermine the commodity-linked Loonie, as Canada is the largest oil exporter to the United States.
Technical Outlook : USDCAD
The USDCAD pair traded on a positive node yesterday. Pair made a high 1.36991 and settled with a gain of 0.36%.
On the above chart, pair is trading under in impulsive wave structure. After completing the 4 waves, pair heading towards 1.3840-13920. Further, a short-term triangle pattern was also noted on the same time.
A break above 1.3720 will lead pair towards 1.3840-1.3920 mark very soon. On the downside, crucial support is seen at 1.35810 only a break below pair could retreat towards 1.35720-1.35550.
Happy Trading!
Commodity Samachar
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