A continuation of our overviews this week, today I’m looking at Canada’s economy and its effect on the Canadian Dollar which is known as the Loonie in the forex geek world.
Bank of Canada is about to pop their third rate decision on the year on Wednesday and the Loonie could go head to head with the US dollar or how I call it, Ms. USA as they dance on the forex dance floor. So what’s been up with Canada’s economy and what should we expect this time? Let’s take a three-way look at the situation.
1- Strong Jobs Data
First, the good news. Both the employment change and jobless rate readings for March came in stronger than expected in Canada, with the former showing a 28,700 increase in hiring and the latter holding steady at 6.8%. Canada has actually ticked up its third consecutive month of better than expected employment change readings.
2- A rate cut on the horizon?
Now for the not-so-good news. Canada’s March jobs report also showed that the positive employment change figure was simply spurred by a 56,800 increase in part-time hiring. Wa- Wa. BUT, while the components of the March report have been far from impressive, the figures still showed a pretty decent rebound from the previous downbeat releases. These might be enough to keep the the Loonie upbeat in the coming days unless the BOC shocks the market with another interest rate cut.
3- Technically speaking…
So what does this mean when we look at the forex dance floor? The USD/CAD pair has been dancing in a range since the beginning of 2015, trapped in a box and simply zigzagging between 1.24 and 1.28. A strong push for the Loonie would bring the USD/CAD pair down, but we would need an ultra push for loonie combined with a shock with the USD to break below the 1.24 level, which would ultimately open doors for dance moves towards the 1.21 level. but considering the fact that even the dismal US jobs report didn’t do the trick, I’d doubt that it would happen this week either.
So for now, enjoy range trade and make smaller pips maybe? That is of course, unless the Bank of Canada surprises us all with a rate cut on Wednesday and make it a lot more fun to trade. Do you think they will cut interest rates this week?Come on over to our social media and let me know. As always, If you liked this video, like it and share it with your friends. To get our latest updates subscribe on investdiva.com and follow us on our social media. Invest responsibly and don’t forget that only you can take care of your money the way it needs to be taken care of, so get yourself educated.