By ForexTime
Prices jumped over 60 pips on Tuesday, testing key resistance at 1.3550 ahead of the Bank of Canada rate decision on Wednesday.
The USDCAD’s recent upside could be based around a weaker Canadian Dollar. It is worth noting that the CAD has slipped against most G10 currencies this week thanks to lower oil prices and expectations around a BoC rate cut.
Looking at the charts, prices remain under pressure on the weekly charts with the 100 and 50-week SMA acting as key levels of resistance.
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Nevertheless, a significant move may be on the horizon and here are 3 reasons why…
On Wednesday, September 4th, the Bank of Canada (BoC) will announce its rate decision.
Weak economic data from Canada have boosted expectations around the BoC cutting interest rates for the third time this year.
Traders have fully priced in a 25-basis point BoC cut by September, another cut by October and one final cut by December!
Note: The latest jobs data from Canada will be published on Friday, September 6th. The unemployment rate is expected to tick higher to 6.5% from 6.4% in the previous month while net change in employment is seen rising to 26.5k after declining by 2.8k in June.
As highlighted in our week ahead report, the major event this week is the US jobs data on Friday.
Given how investors may use this as a guide to how quick or slow the Fed will cut rates from September onwards, this data could rock global financial markets.
The US economy is expected to have created 165k new jobs in August with the unemployment rate ticking lower to 4.2% and average hourly earnings rising to 3.7% year-on-year compared to 3.6% in the previous month.
Traders have fully priced in a 25-basis point Fed cut by September with a 34% probability of a 50 bp move.
USDCAD bulls could be handed more power if prices secure a solid daily close above 1.3550. Still, lagging indicators seem to be favour bears with prices still trading below the 50, 100 and 200-day SMA.
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