Usd to cad rises amidst mixed economic signals from us and canada

USDCAD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	0.42%	58 Pips
Week to-date	-0.02%	-3 Pips
May	0.42%	58 Pips

Upcoming key events (London Time)

Fri 01:30 PM USD Nonfarm Payroll Employment

What happened lately

In the United States, the latest economic data presents a mixed picture of the economy. Initial Unemployment Insurance Claims increased to 241K, indicating potential labor market slackness. The Personal Consumption Expenditures (PCE) Price Index showed signs of slowing inflation, with a 12-month decline to 2.3%, and a monthly figure of zero percent in March. This points towards moderated inflation pressures. Conversely, consumer behavior displayed resilience with an uptick in consumer spending to 0.7% in March, alongside a robust rise in pending home sales by 6.1%. However, the U.S. Chicago Purchasing Managers’ Index fell to 44.6 points, signaling contraction in the manufacturing sector. The GDP disparity observed in the negative annual rate growth of -0.3% from the previously positive 2.4% also reflects challenges in the economic landscape.

In Canada, economic activity declined as evidenced by the drop in GDP to -0.2% for February from a prior high of 0.4% in January. This suggests a cooling in the Canadian economy, potentially due to adverse external conditions or domestic factors affecting economic vitality.

The impact of these developments on USDCAD is multifaceted. The increase in the U.S. unemployment claims and the decrease in GDP growth indicates some economic fragility, which could put downward pressure on the U.S. dollar (USD). Meanwhile, the slight improvement in U.S. consumer spending and home sales could counteract this downward pressure somewhat. Conversely, Canada’s GDP contraction underpins potential economic weaknesses, possibly depreciating the Canadian dollar (CAD). With USDCAD recently rising by 0.42% to 1.38500, reflecting a consolidation phase, the overall scenario could lead to further USD strength relative to CAD, barring any significant surprises from upcoming economic data like the U.S. Nonfarm Payroll Employment report. This report, with high relevance, might sway market sentiments by affecting USD strength, thereby impacting the USDCAD exchange rate accordingly.

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What can we expect from USDCAD today?

USDCAD on Thursday rose 0.42% to 1.38500. Price is below 9-Day EMA while Stochastic is rising.

Updated daily direction for USDCAD looks mixed as the pair is likely to consolidate above 1.37993 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.38621 or trades above daily pivot 1.38307. Break above could target R1 at 1.38814. While to the downside, we are looking at 1.37993 (S1) and daily low of 1.37800 as support levels. USDCAD need to break on either side to indicate a short-term bias. A break above 1.38621 may suggest continuation after recent positive movement.

For the week to-date, take note that USDCAD is mixed as compared to the prior week.

Key levels to watch out:

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