USD/CAD holds on to recovery gains ahead of the BOC/Fed plays

  • USD/CAD benefits from WTI weakness and a likely Fed-BOC divergence.
  • Overall risk-off limits the pair’s advances.

With the Oil weakness conquering overall risk-aversion to please the buyers, USD/CAD takes the bids to 1.3090 while heading into the European session on Wednesday.

Although doubts surrounding the US-China trade deal and market’s risk aversion prior to the key data/events keep a lid on the pair’s recovery, the Loonie manages to remain strong amid overall weakness of Oil prices, Canada’s main export item.

Also exerting downside pressure on WTI is expectations of weak growth numbers from the Eurozone and the United States, which in turn enables the USD/CAD pair shrug-off broad risk-off.

Even so, the US 10-year treasury yields decline from a multi-week high of 1.85% to 1.83% whereas Asian stocks turn red.

Looking forward monetary policy meetings by the US Federal Reserve (Fed) and the Bank of Canada (BOC) will be in the spotlight as a likely 0.25% rate cut from the Fed could highlight monetary policy divergence from the BOC as it isn’t expected to change current benchmark rate.

“The Bank of Canada is widely expected to leave rates unchanged at 1.75% in October, putting the focus on the policy statement and updated economic projections. While economic data has been largely upbeat since July MPR, we do not think this is enough for the BoC to change its tune. We look for the communique to maintain the overall tone from July, while economic projections will try and balance a mark-to-market upgrade to 2019 with modest downgrades to 2020,’ says TD Securities ahead of the event.

Technical Analysis

The pair needs strong upside beyond September lows, around 1.3130, to restore the buyer’s confidence in targeting 1.3200, failing to which sellers can keep an eye over 1.3000 round-figure.

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.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD falls amid Sino-American tensions ahead of Non-Farm Payrolls

EUR/USD is trading around 1.1850, down amid a risk-off mood stemming from President Trump's move against China's TikTok and WeChat. Tension is mounting ahead of the highly uncertain Non-Farm Payrolls.


Gold consolidates near record highs, flat-lined around $2060 area ahead of NFP

Concerns about escalating US-China tensions pushed gold to fresh record highs on Friday. A goodish pickup in the USD prompted some profit-taking amid overbought conditions. 

Gold News

GBP/USD retreats amid doubts about the furlough scheme, dollar strength

GBP/USD is struggling around 1.31 as UK Chancellor Rishi Sunak said the furlough scheme that is underpinning the economy cannot last forever. The dollar is gaining ground amid geopolitical tensions ahead of the Non-Farm Payrolls.


Forex Today: Dollar ticks up after Trump's TikTok move, all eyes on Non-Farm Payrolls

Trump's executive order against TikTok and WeChat has dampened the market mood and strengthened the dollar. Fiscal stimulus have made limited progress and investors are now focused on July NFP, which carries high uncertainty amid the resurgence of coronavirus. 

Read more

WTI drops 1% to $41.50 ahead of US NFP, rigs data

WTI (futures on Nymex) is on a steady decline so far this Friday, undermined by reduced demand for higher-yielding assets amid the renewed US-China tensions induced risk-aversion.

Oil News