Before the release of Canada's September employment data, the Canadian dollar was weak, and the US dollar/Canadian dollar soared above 1.3750.
• It is expected that the Bank of China will further reduce interest rates for the rest of the year.
• The next move of the US dollar will be influenced by the September US PPI data.
The US dollar/Canadian dollar pair continued its winning momentum on the eighth trading day on Friday. The Canadian dollar (CAD) was completely weak, and the Loonie currency pair strengthened and rose above 1.3750. As expectations for the Bank of Canada (BoC) to further reduce interest rates in October continue to rise, the Canadian dollar performed weakly.
Due to price pressures returning to the bank's 2% target and a weak labor market, the Bank of China has reduced borrowing rates by 75 basis points this year. To gain new insights into the current labor market conditions, investors will focus on the September employment data, which will be released at 12:30 Greenwich Mean Time.
Economists predict that China will add 27,000 workers, higher than the 221,000 in August. The unemployment rate is estimated to have accelerated from the previous 6.6% to 6.7%. Signs of further slowing labor demand may prompt expectations that the People's Bank of China will cut interest rates by 50 basis points next month.
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Meanwhile, before the release of the September US Producer Price Index (PPI) data, scheduled for release at 12:30 Greenwich Mean Time, the US dollar (USD) edged higher. The US dollar index (DXY), which measures the value of the US dollar against six major currencies, is close to 103.00.
The US dollar/Canadian dollar pair saw strong buying interest after forming a double bottom near 1.3440 on a daily basis. The bullish reversal structure received a green signal after breaking through the high point of September 19, near 1.3650.
The near-term outlook for the Loonie currency pair will be further strengthened as the 20-day and 50-day exponential moving averages (EMA) are expected to form a bullish pattern near 1.3600.
The 14-day Relative Strength Index (RSI) enters the bullish range of 60.00-80.00, indicating strong upward momentum.If the currency pair breaks through the high point of Thursday at 1.3775, there will be more upward movements towards the high point on April 16th at 1.3846 and the year-to-date high at 1.3945.
In another scenario, a downward trend breaking through the high point near 1.3650 on September 19th will cause the asset to fall near the low point on May 16th at 1.3600, followed by the high point on September 13th at 1.3538.
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