USD/CAD struggles to stay above 1.3500 following weak US ADP Employment data
FUNDAMENTAL OVERVIEW:
- USD/CAD dips below 1.3500 as weaker-than-expected US ADP private payroll data puts pressure on the US Dollar.
- The latest private payrolls figure of 99K fell short of the 145K estimate.
- Meanwhile, the Bank of Canada is anticipated to ease its interest rate policy further.
In Thursday’s New York session, the USD/CAD pair struggles to maintain the psychological support level of 1.3500. The Canadian dollar is under selling pressure following weaker-than-expected US Automatic Data Processing (ADP) Employment data.
The report indicated that private sector payrolls increased by 99K in August, falling short of the anticipated 145K and down from July’s revised figure of 111K. This weaker data has heightened concerns about worsening labor market conditions and fueled expectations that the Federal Reserve may aggressively cut interest rates this month.
Looking ahead, investors will be keenly awaiting the release of the US ISM Services PMI data for August, scheduled for publication at 14:00 GMT.
Meanwhile, the Canadian Dollar (CAD) remains under pressure as market participants anticipate further policy easing from the Bank of Canada (BoC). The BoC recently cut interest rates by 25 basis points (bps) to 4.25%, marking its third consecutive 25 bps cut. ING analysts noted, “We expect the BoC to continue cutting rates by 25 bps at each meeting until next summer, with the policy rate projected to reach 3% by then.”
Looking ahead, the Canadian Dollar will be affected by the August labor market data set to be released on Friday.
USD/CAD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
USD/CAD is currently trading within a down channel.
USD/CAD is positioned below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in a Neutral zone, while the Stochastic oscillator suggests a Negative trend.
Immediate Resistance level: 1.3554
Immediate support level: 1.3495
HOW TO TRADE USD/CAD
USD/CAD experienced a significant surge but could not break through its previous peak. This led to a period of consolidation within a trading range before a downward break. The price subsequently plummeted. Despite a recent attempt to recover, USD/CAD encountered bearish resistance, forming a bearish engulfing pattern. Further declines are likely if the price remains below the current resistance level.