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Photo by Michelle Spollen on Unsplash

The Canadian Dollar caught a rally on Wednesday, bolstered by a rate hold from the Bank of Canada (BoC) following an accelerated string of rate cuts. Broad-market investor sentiment remains pinned on the low side after a disappointing US ADP jobs data print, hobbling the US Dollar. Traders are buckling down for the wait to Friday’s official US Nonfarm Payrolls (NFP) jobs package before making any rash decisions.

BoC Governor Tiff Macklem reiterated that the Canadian central bank will not be actively engaging in forward guidance on interest rate decisions as long as trade with the US remains volatile and Donald Trump’s ever-changing tariffs remain a constantly-moving target. May’s rate hold is the first time the BoC hasn’t reduced interest rates after seven straight rate cuts. The final rate cut in April sparked a jump in Canadian bond yields after the BoC’s rate-cutting streak shook investor confidence in the Canadian economy’s ability to absorb rapidly-changing interest rates.

Daily digest market movers: Canadian Dollar pings fresh highs as Greenback softens

• The Canadian Dollar rose four-tenths of one percent against the US Dollar on Wednesday, sending the Loonie into eight-month highs.
• USD/CAD has closed below the 1.3700 handle for the first time since October of last year.
• The BoC held its main reference rate steady at 2.75% on Wednesday, snapping a seven-meeting rate cutting streak.
• US ADP jobs figures came in much softer than expected on Wednesday. Despite underlying volatility in ADP Employment Change figures and a general lack of correlation with NFP jobs figures, investors were knocked off-balance after the first major sign of possible weakness in the US labor market.
• The key data print for this week will be Friday’s Canadian employment report, however Canadian data will be entirely eclipsed by US NFP jobs figures due at the same time.

Canadian Dollar price forecast

The Canadian Dollar has gained fresh ground against the US Dollar, sending the USD/CAD into fresh eight-month lows. The June trading session has just started, and the Canadian Dollar is already on pace to gain ground against the Greenback for a fifth straight month.

USD/CAD continues to grind lower, following a downside channel into the low side. Technical oscillators are pinned firmly in oversold territory, implying that a technical upside correction could be on the cards, but heavy technical resistance is priced in at both the 1.3700 handle and the 50-day Exponential Moving Average (EMA) descending into 1.3900.

USD/CAD daily chart

(Click on image to enlarge)

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