USD/CAD flat-lines around 1.3415 area, bulls have the upper hand above 100-day SMA – by hareshmenghani USDCAD Fed RiskAppetite BOC Currencies
A modest USD downtick acts as a headwind, though the downside is likely to remain limited.USD/CAD
pair oscillates in a narrow trading band through the Asian session on Wednesday and currently trades around the 1.3415 region, nearly unchanged for the day. The overnight breakout through the 100-day Simple Moving Average , meanwhile, favours bulls and warrants caution before positioning for an extension of the overnight pullback from the 1.3500 psychological mark, or over a two-month high.
It is worth recalling that the closely-watched US monthly jobs report released last Friday pointed to the continued tightness in the labour market and raised the odds for a soft economic landing. Moreover, Fed Governor Michele Bowman kept alive hopes for one more 25 bps lift-off in September or November and said on Monday that additional interest rate hikes will likely be needed to lower inflation to the central bank's 2% target.
In contrast, the Bank of Canada is now expected to pause its interest rate hike campaign, especially after Statistics Canada reported that the economy shed 6,400 jobs in July and the jobless rate ticked up to 5.5%. Apart from this, a mildly softer tone around Crude Oil prices could undermine the commodity-linked Loonie and lend support to the USD/CAD pair.
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