USD/CAD faces pressure near 1.3700 as US Dollar struggles for firm footing
- USD/CAD remains offered near 1.3700 as the US Dollar struggles to hold an auction above 105.00.
- Weak US data and less hawkish commentary from Fed Williams have weighed on the US Dollar.
- Canadian employers are anticipated to have hired 20K job-seekers in April.
The USD/CAD pair consistently faces pressure near the round-level resistance of 1.3700. The Loonie asset is broadly sideways around 1.3680 due to the absence of top-tier United States economic data this week. In Canada, investors will keenly focus on the Employment data for April, which will be released on Friday.
Therefore, speculation about the Federal Reserve’s (Fed) and Bank of Canada’s (BoC) interest rate outlook will guide the movement in the Loonie asset.
The market sentiment is slightly bullish amid firm speculation that the Fed will begin lowering interest rates from its current level in the September meeting. The S&P 500 opens on a cautiously positive note, suggesting an improvement in investors’ risk appetite. 10-year US Treasury yields have dropped to 4.45% as the Fed unwinding its restrictive interest rate stance is an unfavorable condition for interest-bearish assets.
The US Dollar Index (DXY) struggles to sustain above 105.00 as weak US Nonfarm Payrolls (NFP) and poor Services PMI data for April has prompted expectations for the Fed to start reducing borrowing rates from September. Weak US data has raised concerns over the US economic outlook, which investors had been anticipating as strong due to upbeat Gross Domestic Product (GDP) growth.
Meanwhile, less hawkish commentary from Fed policymakers has also weighed on the US Dollar. On Monday, New York Fed Bank President John Williams said the next move from the central bank will be rate cuts.
On the Canadian Dollar front, investors await the Employment data that will influence expectations for BoC rate cuts, which are currently anticipated in the June meeting. Statistics Canada is expected to report an increase in number of payrolls by 20K against a drawdown of 2.2K in March. The Unemployment Rate is estimated to increase to 6.2% from the prior reading of 6.1%. Investors will keenly focus on the annual Average Hourly Wages data that will indicate wage growth, which indicates the inflation outlook.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
