Current trend

During the Asian session, the USD/CAD pair is consolidating at 1.3560 amid the monetary policy of the Bank of Canada.

On Wednesday, the regulator cut the interest rate by 25 basis points to 4.25%, as experts expected, while signaling concerns about a sharp drop in inflation. However, the weakening of the national currency was limited since the borrowing cost adjustment was already included in the quotes. Activity on the market remains poor since there are no new drivers on the market at the beginning of the week.

On Friday, investors paid attention to the US labor market data ahead of the upcoming US Fed meeting on September 18, at which officials may switch to the “dovish” course. Nonfarm payrolls reached 142.0K, below expectations of 160.0K. However, the greatest effect was caused by the revision of the July figure from 114.0K to 89.0K. Nevertheless, the acceleration of average hourly earnings in August from 0.2% to 0.4% compared to forecasts of 0.3% MoM and from 3.6% to 3.8% against 3.7% YoY offset the negative effect. The unemployment rate fell from 4.3% to 4.2%. The statistics did not lead to a significant revision of assumptions regarding the interest rate adjustment. Like a week ago, the probability that it will be –50 basis points does not exceed 35.0–37.0%. Experts expect a change of –25 basis points, as well as at least one more reduction of a similar amount before the end of the year.

Canadian data was also ambiguous. The August number of employed people increased by 22.1K after decreasing by 2.8K earlier, although analysts expected 25.0K, average hourly earnings slowed from 5.2% to 4.9%, and the unemployment rate accelerated from 6.4% to 6.6% compared to forecasts of 6.5%. In addition, the Ivey PMI corrected from 57.6 points to 48.2 points, below expectations of 55.5 points.

Support and resistance

On the daily chart, Bollinger bands are reversing horizontally. The price range is narrowing, reflecting the emergence of multidirectional trading in the short term. The MACD indicator is growing, maintaining a strong buy signal (the histogram is above the signal line). Stochastic, which tried to reverse downwards last week, is returning to growth near the highs, signaling that the US currency may become overbought in the ultra-short term.

Resistance levels: 1.3582, 1.3614, 1.3650, 1.3675.

Support levels: 1.3550, 1.3524, 1.3500, 1.3450.

Trading tips

Long positions may be opened after a breakout of 1.3582, with the target at 1.3650. Stop loss – 1.3550. Implementation period: 1–2 days.

Short positions may be opened after a breakdown of 1.3550, with the target at 1.3500. Stop loss – 1.3582.