- USD/CAD trades near a five-month high around 1.3670 as the focus shifts to BoC policy.
- The BoC is expected to keep interest rates steady at 5% amid a soft labor market.
- Investors underpinned the US Dollar as a safe haven despite hopes that the Fed is done with hiking interest rates.
The USD/CAD pair oscillates near a fresh five-month high of around 1.3670 ahead of the interest rate decision by the Bank of Canada (BoC). A power-pack action is anticipated in the Loonie asset after the announcement of the monetary policy decision by BoC Governor Tiff Macklem.
Analysts at CIBC point out that the decline in consumption is likely to hinder any future interest rate hikes by the BoC. Canada’s labor market has been soft as its Unemployment Rate has been increasing for the past three months. Also, Canadian employers have laid off workers two times in the past three months. An absence of strength in the labor market would allow the BoC to keep interest rates unchanged at 5%. However, policymakers would keep room open for further policy tightening.
Later this week, Canada’s labor market data for August will be keenly watched. The Unemployment Rate is seen further rising to 5.6% while a fresh addition of 15K employees is expected vs. retrenchment of 6.4K employees.
Meanwhile, S&P500 futures generated some losses in the London session, portraying caution among market participants due to global recession fears. For the action, investors will focus on the United States ISM Services PMI for August, which will be published at 14:00 GMT. Analysts at TD Securities expect the US ISM Services PMI to hold steady at 52.7 in August.
The US Dollar Index (DXY) remained sideways around 104.50 on Wednesday while the broader bias is strong amid jittery global growth. Investors underpinned the US Dollar as a safe haven despite slower wage growth boosting hopes of a steady interest rate policy by the Federal Reserve (Fed) in September.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds above 1.0400 in quiet trading
EUR/USD trades in positive territory above 1.0400 in the American session on Friday. The absence of fundamental drivers and thin trading conditions on the holiday-shortened week make it difficult for the pair to gather directional momentum.
GBP/USD recovers above 1.2550 following earlier decline
GBP/USD regains its traction and trades above 1.2550 after declining toward 1.2500 earlier in the day. Nevertheless, the cautious market mood limits the pair's upside as trading volumes remain low following the Christmas break.
Gold declines below $2,620, erases weekly gains
Gold edges lower in the second half of the day and trades below $2,620, looking to end the week marginally lower. Although the cautious market mood helps XAU/USD hold its ground, growing expectations for a less-dovish Fed policy outlook caps the pair's upside.
Bitcoin misses Santa rally even as on-chain metrics show signs of price recovery
Bitcoin (BTC) price hovers around $97,000 on Friday, erasing most of the gains from earlier this week, as the largest cryptocurrency missed the so-called Santa Claus rally, the increase in prices prior to and immediately following Christmas Day.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.