For the 24 hours to 23:00 GMT, the USD rose 0.51% against the CAD and closed at 1.2897, after macroeconomic data showed that Canada’s economy unexpectedly contracted in August, supporting the Bank of Canada’s (BoC) view to take some caution on further interest rate hikes.
Canada’s GDP registered an unexpected drop of 0.1% in August, as slump in oil & gas and manufacturing more than offset gains in other industries. Market had anticipated for a 0.1% rise in GDP following an unchanged reading in the previous month.
Meanwhile, the BoC Governor, Stephen Poloz, stated that Canada is at a “crucial” spot in the economic cycle and its economy faces a number of significant risks. He highlighted the major sources of uncertainty for the central bank, including weak inflation and wage growth, as well as high household debt.
In the Asian session, at GMT0400, the pair is trading at 1.2899, with the USD trading 0.02% higher from yesterday’s close.
The pair is expected to find support at 1.2843, and a fall through could take it to the next support level of 1.2787. The pair is expected to find its first resistance at 1.2935, and a rise through could take it to the next resistance level of 1.2971.
Later in the day, investors will closely monitor Canada’s manufacturing PMI data for October and BoC Governor, Stephen Poloz’s testimony to Senate.
The currency pair is trading above its 20 Hr and 50 Hr moving averages.