Speculators who have been trying to pursue bearish momentum this week in the USD/CAD are likely not enjoying their results. The Bank of Canada kept its Overnight Rate at the 5.00% mark yesterday. The BoC did say they are ready to be hawkish regarding policy, but admitted the economy of Canada is lackluster. Thus, while the Bank of Canada tried to sound as if they are concerned about inflation, they also essentially signaled they are halting interest rate hikes. And yes, this sounds very similar to what U.S Federal Reserve rhetoric has been the past couple of months.
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Day traders were likely pleased with last Friday’s lows if they were pursuing downwards momentum. However, after the 1.34800 mark was challenged late last week, a rather incremental climb began in the USD/CAD. As of this writing the currency pair is near the 1.35875 ratio. The high seen late last night in the USD/CAD traversed near the 1.36080 mark before the Forex pair began to sell off.
Short and Near-Term Challenges Ahead for USD/CAD Traders
The USD/CAD is within sight of its weekly high, but it is also rather comfortably trading near its one month lows. Speculators know technical perspectives are vital and timeframes are crucial to pursuing the USD/CAD. Yesterday’s Bank of Canada provided some impetus, but financial institutions were likely not surprised by the BoC’s Rate Statement. Now the USD/CAD will revert back to a USD centric trading mode.
Tomorrow’s Non-Farm employment Change and Average Hourly Earnings statistics will come from the U.S. The results will be anticipated by all speculators, but financial institutions may play it rather ‘safe’ today and tomorrow, because they are also anticipating the U.S Federal Reserve’s FOMC Statement next Wednesday.
It is likely choppy conditions will persist today and tomorrow in the USD/CAD and that behavioral sentiment will dominate. Risk appetite remains intriguing. U.S equities have struggled this week, but they have not seen a major selloff, which suggests major traders may be waiting for additional reasons to buy indices. The U.S jobs numbers could provide volatility tomorrow, but the Fed’s rhetoric next week may prove to be a major ignition switch.
Resistance in the USD/CAD is Crucial
- If the USD/CAD can sustain its value below the 1.36000 level in the short-term, this may continue to spark some selling positions which aim for support levels as take profit goals by sellers.
- Support near the 1.35850 mark should be watched and if it proves vulnerable, this could set the table for further downward momentum.
- However, USD/CAD traders should be braced for continued choppiness into tomorrow’s U.S jobs number.
Canadian Dollar Short-Term Outlook:
Current Resistance: 1.35990
Current Support: 1.35850
High Target: 1.36175
Low Target: 1.35420
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