Usdcad consolidates as fed holds rates steady, Canadian PMI declines

USDCAD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	0.12%	17 Pips
Week to-date	-0.17%	-23.9 Pips
May	-0.01%	-2 Pips

Upcoming key events (London Time)

Fri 01:30 PM CAD Labour Force Net Change in Employment

What happened lately

The U.S. Federal Reserve has decided to keep the Federal Funds Rate unchanged at 4.5%. This decision suggests that the Federal Reserve is maintaining a cautious approach, potentially assessing the balance between inflation and economic growth. By holding the interest rate steady, the Federal Reserve aims to support economic recovery while closely monitoring inflationary pressures within the U.S. economy.

In Canada, economic data indicates a weakening trend in the purchasing managers’ sentiment. The Ivey Purchasing Managers Index fell to 52.3 in April from 55.6 in March, while the seasonally adjusted index dropped to 47.9 from 51.3 in the same period. These declines may suggest slowing growth in the Canadian economy, with purchasing managers reporting decreased activity. The falling indices could indicate concerns about demand and production, impacting business confidence.

The USDCAD currency pair rose by 0.12% to 1.37840, exhibiting consolidation. The difference in economic data between the U.S. and Canada can have implications for the exchange rate. With the U.S. maintaining its interest rate, investors may perceive stability in the U.S. dollar. In contrast, the declining indices in Canada might indicate economic sluggishness, thereby weakening the Canadian dollar. The relative economic strength of the U.S. could lead to a strengthening of the USDCAD pair. Additionally, upcoming high-impact events in Canada, such as the Labour Force Net Change in Employment, could further influence the pair depending on the employment data’s outcome. If the data reflects weak employment growth or job losses, it might exert further downward pressure on the Canadian dollar against its U.S. counterpart.

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What can we expect from USDCAD today?

USDCAD on Wednesday rose 0.12% to 1.37840. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for USDCAD looks mixed as the pair is likely to consolidate above 1.37624 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.37987 or trades above daily pivot 1.37806. Break above could target R1 at 1.38021. While to the downside, we are looking at 1.37624 (S1) and daily low of 1.37590 as support levels. USDCAD need to break on either side to indicate a short-term bias. A break above 1.37987 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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