Quick Look:
- CAD/USD saw swings from 1.3721 to 1.3761, closing lower at 1.3728, influenced by US economic data and oil price changes.
- WTI crude oil rose to $77.44, boosting the CAD, while gold’s climb to $2311.03 signalled increased market caution.
- Upcoming Canadian job reports and US jobless claims are critical, with potential implications for central bank policies.
This week, the Canadian Dollar experienced noticeable fluctuations against the US Dollar, primarily driven by external economic factors and internal data releases. The currency pair opened at 1.3747 USD/CAD, with the exchange rate witnessing a range of movement from 1.3721 to 1.3761 before settling lower at 1.3728 by the close.
The week was marked by significant events impacting the CAD/USD trajectory. The CAD fell sharply to an equivalent of 1.3700 USD/CAD, instigated by disappointing US jobless claims. Furthermore, a rebound in oil prices affected CAD as it traditionally supports the commodity-linked Canadian currency.
Moreover, the pair tested a critical resistance level at the USD equivalent of 1.2710 CAD/USD. However, faced challenges maintaining momentum due to the strong US Dollar. It later found robust support near the 1.3700 mark, leading to a modest recovery as oil prices continued to influence movements.
US Jobless Claims Jump to 231K, Canada Expects 20K New Jobs
The week also brought critical data from both the US and Canada, influencing the CAD/USD exchange. The US labour market’s strength became a concern as the actual employment figures rose to 231K, exceeding the forecast of 210K. This led to downward pressure on the US Dollar, which indirectly boosted the Canadian Dollar.
Moreover, an upcoming report expected to show 20K new jobs against a backdrop of a slight increase in unemployment rates to 6.2% will be significant for the CAD. This report will likely influence the Bank of Canada’s stance on interest rates, with potential ripple effects on CAD/USD.
Central Banks in Focus: Fed and BOC Watch Amid Economic Data
Recent comments from Federal Reserve officials, including Neel Kashkari, have highlighted concerns over a weakening US job market, which could justify revising interest rate policies. The Fed’s current position is to maintain rates until inflation consistently reaches its 2% target. Therefore, this stance is affecting USD strength and, consequently, the CAD/USD rate.
CAD/USD Finds Support at 1.3700, Resistance Up to 1.2800
The CAD/USD pair finds support at the USD equivalent levels of 1.3700, with technical indicators like the 20-day EMA reinforcing this threshold. Resistance is seen at the USD equivalent of 1.2710, with further barriers up to 1.2800. The 14-period RSI suggests market indecision, oscillating between 40.00 and 60.00. Numbers indicate a potential for either direction depending on upcoming economic reports and central bank actions.
CAD/USD Volatility Hinges on Central Bank Decisions
As market watchers closely monitor the interplay between commodity prices, upcoming job data, and central bank policies, the CAD/USD pair remains a focal point for traders and analysts alike. The currency’s performance in the coming weeks will be pivotal, hinging on economic developments and policy decisions from countries. This dynamic paints a complex but intriguing picture of the CAD/USD exchange rate, highlighting its sensitivity to domestic and international economic shifts.
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