The Canadian Dollar (CAD) experienced a slight decline against the US Dollar (USD) after the Bank of Canada (BoC) announced a quarter-point rate cut as expected. This led to a brief rise in the USD/CAD pair to 1.3740 before settling back around the 1.3700 level. Despite the rate cut, the US ISM Services Purchasing Managers Index (PMI) figures for June unexpectedly rose to a nine-month high, impacting the currency pair.
The BoC’s decision to cut its main reference rate to 4.75% from 5.0% was in line with market expectations, with BoC Governor Tiff Macklem stating that future rate cuts will be considered on a meeting-by-meeting basis. Meanwhile, US economic indicators, such as the ISM Services PMI rebounding to 53.8 in May and the ADP Employment Change coming in lower than expected, also influenced market sentiment.
Looking ahead, market focus will shift to Friday’s upcoming Canadian labor figures and US Nonfarm Payrolls (NFP) data, which is expected to overshadow Canadian employment data. Interest rate market bets on a potential Federal Reserve rate cut in November have risen to 80%, adding further uncertainty to the currency market.
The Canadian Dollar’s performance against major currencies today showed a mixed picture, with the CAD being the strongest against the Japanese Yen. The heat map displays percentage changes of major currencies against each other, with the CAD showing fluctuations against the USD, EUR, GBP, JPY, AUD, NZD, and CHF.
Technical analysis of the Canadian Dollar on Wednesday revealed a slight decline against the Greenback, with the CAD showing mixed movements against different currencies. The pair briefly rose to 1.3740 before correcting back to around 1.3700, indicating near-term congestion and waffling bids close to the 50-day Exponential Moving Average (EMA) at 1.3649.
Overall, the recent BoC rate cut and US economic indicators have influenced the performance of the Canadian Dollar, with market sentiment likely to be driven by upcoming labor data releases and the NFP report. Traders will continue to monitor developments in monetary policy and economic indicators to gauge future movements in the CAD/USD pair and other currency pairs.
