Loonie Fails To Cover Ground Despite Holiday Thinned Market

The USD/CAD pair built on last week’s strong up-move and is currently placed at near 3-week tops, closer to the key 1.30 psychological mark. Despite Greenback losing ground against major global currencies led by a sharp spike in Common currency (EURO) the pair continued to gain positive momentum across Asian trading hours. The pair has been on bull momentum in favor of US Greenback since trading session opened for the week. This bull momentum was greatly influenced by ongoing steep decline of Crude Oil price in international market. This coupled with some follow-through technical buying, especially after Friday’s bullish break-out, further collaborated to the bid tone surrounding the major, for the fifth straight session. Analysts and investors are currently waiting to see if bulls are able to maintain their dominant position amid holiday-thinned liquidity conditions ahead of this week’s important release of the keenly watched US non-farm payrolls data.

USDCAD Moves Higher

Investors are also waiting for Canadian GDP figures and Bank Of Canada’s Policy Meeting updates which are expected to provide triggers for Loonie at multiple point across the week. Recent data out of Canada has been mixed, which together with the still uncertain outcome of the NAFTA renegotiation, complicates the Bank of Canada’s rate setting decision on Wednesday.

With no timeframe yet as to when the trade talks will conclude, the BOC is unlikely to want to rock the boat and raise interest rates in May, even though there’s been descent progress with inflation accelerating and the labor market improving since the last rate hike in January. The Canadian economy is forecast to have expanded by 1.7% on an annualized basis in the three months to March, unchanged from the prior quarter’s rate. A stronger figure could prompt the BOC to signal a rate hike at its next meeting in July. A hawkish shift would also help the Canadian dollar break below recent resistance at the $1.2725 level if the loonie manages to reverse Greenback’s momentum by then. Expected support and resistance for the pair are at 1.2922 / 1.2840 / 1.2811 and 1.3024 / 1.3095 / 1.3124 respectively.