- USD/CAD climbs above 1.3700 as traders eye a break of 1.3800 as they focus on Friday’s NFPs.
- The Bank of Canada’s Governor Macklem said, “further interest rate increases are warranted,” reiterating the BoC’s hawkish stance.
- USD/CAD Price Forecast: An inverted head-and-shoulders in the hourly chart remains in play.
The USD/CAD climbs sharply during the North American session, as Fed officials remained focused on bringing inflation down, disregarding a possible US recession, while markets’ expectations for a Fed pivot dwindled, as shown by US equities, registering losses. Therefore, the USD/CAD is trading at 1.3722, above its opening price by 0.81%.
At the time of writing, the Bank of Canada’s Governor Tiff Macklem expressed in prepared remarks that while Canada’s economy begins to slow, the labor market remains tight, while demand is still eclipsing supply. Macklem commented that the bank needs clear evidence that inflation is coming down.
Hence, BoC’s Macklem added that “there is more to be done,” paving the way for additional rate hikes. The next Bank of Canada’s interest rate decision would be October 26.
The USD/CAD reacted downwards on his remarks crossing newswires, dropping below 1.3700, but quickly reversed its move and testing the daily highs.
Earlier, Canada’s Ivey PMI index for September rose by 55.9 in September, unadjusted, while seasonally adjusted, came at 59.5, below previous figures.
Aside from this, US data, even though it flashed signs that the labor market might begin to feel the Fed’s monetary policy, traders remain at bay, waiting for Friday’s Nonfarm Payrolls figures. Initial Jobless Claims reported by the US Labor Department outpaced expectations in the week ending on October 1, rising to 219K, higher than estimates of 203K, while the 4-week average persisted unchanged at 206.5K.
Before Wall Street opened, the Minnesota Fed President Neil Kashkari said that the Fed is “quite a ways away from pausing rates,” reiterating the that there’s “more work to do” to bring inflation towards the Fed 2% target. Elsewhere, on Wednesday, Atlanta’s Fed Bostic and San Francisco Fed Daly expressed the need to hike rates higher for longer, disregarding possible rate cuts in 2023.
USD/CAD Price Forecast
The USD/CAD one-hour chart grabbed the attention as an inverted head-and-shoulder chart pattern emerged. Earlier, the USD/CAD dived towards its daily low at 1.3564 but is staging a recovery, above 1.3720, testing the previously mentioned head-and-shoulders pattern neckline around current exchange rates. Once cleared, it could open the door for further gains, with the R2 daily pivot being the immediate target at 1.3800, ahead of the 1.3877 head-and-shoulders targets.
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.