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On September 1st, Royal Canadian Securities analyst Abbas Keshwani commented that given the yens weakness, the Bank of Japan (BOJ) may raise interest rates or intervene in the foreign exchange market in the coming weeks. The yen has weakened over the past month, and recent depreciation has already offset much of the BOJs intervention efforts over the past few months. Keshwani stated that for the yen to appreciate significantly, the BOJ would need to adopt an aggressive rate hike cycle, but it is unlikely to do so at the expense of economic growth. He added, "The BOJ may raise interest rates to a level sufficient to prevent the yen from weakening excessively until the Japanese government bond market stabilizes next year, thus creating conditions for a yen recovery."On September 1st, BCA Research analyst Felix Wezina-Poirier stated in a report that volatility in government bond yields is expected to be a significant factor influencing risk asset prices. Sovereign bond yields have risen to multi-year highs due to inflation concerns triggered by high oil prices. Wezina-Poirier stated, "For equities, the absolute level of yields is less important than the speed of change; therefore, implied interest rate volatility is a more useful indicator for measuring equity market risk." However, Federal Reserve Chairman Warshs remarks last week signaled a readiness to take action to curb inflation, which should help keep yield volatility at a relatively controlled level.September 1st news: Voyah Automobile delivered 13,003 vehicles in August 2026, and a total of 102,456 vehicles from January to August 2026, representing a year-on-year increase of 25%.Micron Technology (MU.O) shares fell 1.5% in pre-market trading.Both WTI and Brent crude oil rose by $0.60 in the short term, currently trading at $86.28 per barrel and $91.44 per barrel respectively.

As investors wait for US/Canada employment data, the USD/CAD trading range is limited to 40 pips

Daniel Rogers

Apr 06, 2023 13:36

 USD:CAD.png

 

The USD/CAD pair retraced below 1.3450 in the early Asian session as the US Dollar Index (DXY) lost upside momentum after reaching the key resistance level of 102.00. As investors anticipate the release of the United States/Canada Employment data, the Canadian dollar is expected to deliver a dazzling performance.

 

As a consequence of a decline in Job Openings and sluggish additions of new positions, as measured by Automatic Data Processing, firms have slackened recruitment efforts, thereby alleviating the tight US labor market. (ADP). This has led to expectations that the Federal Reserve (Fed) will keep interest rates unchanged at its May meeting.

 

In the interim, S&P500 futures have resumed their downward trend, indicating a cautious market sentiment.

 

Employment data will influence the Canadian Dollar. The consensus estimate for Net Change in Employment is 12K, which is a decrease from the previous release of 21.8K. The estimated unemployment rate is 5.1%, up from 5.0% previously.

 

The USD/CAD exchange rate is exhibiting an Inverted Flag pattern on an hourly time frame. The Inverted Flag is a trend-following pattern that consists of a protracted consolidation followed by a decline. Participants prefer to enter an auction after a bearish bias has been established, and current vendors increase their position size during the consolidation phase of a chart pattern.

 

The Canadian dollar was unable to maintain a position above the 50-period Exponential Moving Average (EMA) at 1.3458, indicating that further declines are imminent.

 

Meanwhile, the Relative Strength Index (RSI) (14) has an upper limit of 60.00. A violation of the unfavorable 20.00-40.00 range will trigger downward momentum.

 

A break below the low of April 04, 1.3406, would expose the asset to a fresh six-week low around 1.3350, the low of February 6 followed by round-number support at 1.3300.

 

In an alternative scenario, a move above the psychological resistance of 1.3500 would lend momentum to US Dollar supporters, propelling the asset toward the 31- and 29-March highs of 1.3559 and 1.3619, respectively.


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