USD/CAD remains on the defensive above 1.3600 ahead of the BoC rate cut decision

USD/CAD trades with mild losses near 1.3620 on Tuesday.
The US business activity in the manufacturing sector contracted for the second consecutive month in May.
Markets expect the BoC to cut its key lending rate by a quarter of a percentage point on Wednesday.

Lallalit Srijandorn FXStreet

The USD/CAD pair remains on the defensive around 1.3620 during the early Asian session on Tuesday. The downtick of the pair is backed by the softer US Dollar (USD) to the 104.00 support level on Monday. Investors will shift their focus to the US Services PMI on Wednesday ahead of the highly-anticipated Nonfarm Payrolls (NFP).

The Institute for Supply Management (ISM) revealed on Monday that business activity in the manufacturing sector contracted for the second consecutive month in May. The US Manufacturing PMI declined to 48.7 in May from the previous reading of 49.2, below forecasts of 49.6. The weaker-than-expected reading exerted some selling pressure on the US Dollar (USD) and prompted speculation on Fed rate cuts this year.

On Friday, the US Nonfarm Payrolls (NFP) will take centre stage, which is estimated to see 190,000 job additions in May. In case of stronger-than-expected data, this could boost the USD.

The Bank of Canada (BoC) is expected to cut its overnight rate by 25 basis points (bps) to 4.75% on Wednesday as inflation in Canada cooled down in April. CIBC Capital Markets economists anticipate the BoC could cut its interest rate up to three times before the Fed begins easing policy. The divergence of policy rate between the BoC and Fed might drag the Canadian Dollar (CAD) lower and create a tailwind for USD/CAD. The BoC governor Tiff Macklem said that a rate cut is possible, but that the decision would be driven by economic data.

USD/CAD

Overview
Today last price	1.3623
Today Daily Change	-0.0004
Today Daily Change %	-0.03
Today daily open	1.3627

Trends
Daily SMA20	1.3662
Daily SMA50	1.3662
Daily SMA100	1.3582
Daily SMA200	1.3575

Levels
Previous Daily High	1.3669
Previous Daily Low	1.3603
Previous Weekly High	1.3735
Previous Weekly Low	1.3615
Previous Monthly High	1.3783
Previous Monthly Low	1.359
Daily Fibonacci 38.2%	1.3628
Daily Fibonacci 61.8%	1.3644
Daily Pivot Point S1	1.3597
Daily Pivot Point S2	1.3567
Daily Pivot Point S3	1.3532
Daily Pivot Point R1	1.3663
Daily Pivot Point R2	1.3699
Daily Pivot Point R3	1.3729

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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