Canadian Dollar clings to daily gains above 1.3500

Canadian Dollar clings to daily gains above 1.3500

 

  • Canadian Dollar bounces up with the US Dollar retreating on downbeat US data.
  • US service sector activity decelerated against expectations with Prices Paid printing lowest level in years.
  • Strong US ADP and hawkish comments from Fed’s Bostic have failed to support USD.

The Canadian Dollar (CAD) is trading higher on Wednesday, retracing the previous two days’ losses. The Loonie is favored by the US Dollar’s knee-jerk reaction following downbeat US services activity data.

The US ISM Services PMI missed market expectations in March, with the Prices Paid sub-index showing a significant slowdown. This has eased investors’ fears of a strong economy that would prompt the Federal Reserve (Fed) to dial down its monetary easing plans, which have pushed US Treasury yields and the US Dollar lower.

The downbeat services data has offset the larger-than-expected increase in the ADP Employment Report, and the hawkish remarks by Fed Chair Jerome Powell and Atlanta Fed President, Raphael Bostic, reiterating that there is no rush to cut interest rates.

Beyond that, the increasing geopolitical tensions and growing concerns about tighter supply have pushed crude prices to a fresh year-to-date (YTD) high. This is providing additional support to the commodity-linked CAD. 

Daily digest market movers: USD/CAD dives as services activity data disappoint
 

  • Canadian Dollar regained lost ground on Wednesday as soft US services activity data has sent US yields and the US Dollar lower.
     
  • US ISM Services PMI dropped to 51.4 in March from 52.6 in February against market expectations of a slight increase to 52.7.
     
  • The ISM Prices Paid sub-index has dropped to 53.4, its lowest level in years, from 58.6 in February and 64 in January. This signals a disinflationary contribution to the economy.
     
  • Somewhat later, Fed Chair, Jerome Powell repeated that the bank is not in a rush to start lowering borrowing costs, although the impact on the US Dollar has been marginal.
     
  • Earlier on Wednesday, the US ADP Employment Report showed an increase of 184,000 new payrolls in March from 155,000 in February. The market had forecasted a decline to 148,000.
     
  • Before Powell, Atlanta Fed President Raphael Bostic held his hawkish ground on Wednesday suggesting that rate cuts might not arrive before Q4.

Canadian Dollar price today

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the weakest against the Australian Dollar.

 USDEURGBPCADAUDJPYNZDCHF
USD -0.62%-0.62%-0.26%-0.81%0.08%-0.69%-0.52%
EUR0.61% 0.00%0.36%-0.19%0.69%-0.07%0.10%
GBP0.62%0.00% 0.35%-0.19%0.69%-0.07%0.09%
CAD0.25%-0.36%-0.37% -0.56%0.33%-0.43%-0.26%
AUD0.80%0.17%0.16%0.55% 0.88%0.13%0.25%
JPY-0.08%-0.70%-0.72%-0.34%-0.89% -0.77%-0.60%
NZD0.70%0.07%0.07%0.42%-0.13%0.71% 0.12%
CHF0.51%-0.10%-0.10%0.26%-0.29%0.59%-0.17% 

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

 

Technical analysis: The USD/CAD is under pressure with support levels at 1.3515 and 1.3475

The strong bearish reversal on the USD/CAD following the release of the ISM Services PMI has put bears back in control. They aim to breach support at 1.3515,  which is under pressure at the moment.

The overall picture shows choppy and volatile trading with the pair still moving inside a slightly bullish channel. The mentioned 1.3515 level is guarding the base of the channel at 1.3475 and 1.3440. On the upside, resistances are at 1.3585 and 1.3615.

USD/CAD 4-Hour Chart

 

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