Current trend

During the Asian session, the USD/CAD pair demonstrates ambiguous dynamics, holding close to 1.3490.

Traders are in no hurry to open new positions ahead of the publication of the September report on private sector employment from Automatic Data Processing (ADP) at 14:15 (GMT 2), which may reflect an increase in the indicator from 99.0K to 120.0K, supporting the American dollar. The labor market forecasts include a slight decrease in nonfarm payrolls from 142.0K to 140.0K, while the average hourly earnings may stay at 3.8% YoY and decrease from 0.4% to 0.3% MoM. The unemployment rate is likely to remain at 4.2%.

Canada will not publish its labor market report at the end of the week, and therefore, investors’ attention to macroeconomic statistics is limited. Yesterday, market participants focused on a noticeable increase in the September S&P Global manufacturing PMI from 49.5 points to 50.4 points. Meanwhile, the American Institute for Supply Management (ISM) manufacturing PMI showed only neutral dynamics, remaining at 47.2 points, contrary to forecasts for growth to 47.5 points. Canada’s Q3 real gross domestic product (GDP) amounted to less than 1.5%, below potential and even last year’s pace, as noted by Douglas Porter, chief economist at the Bank of Montreal. The official added that this means a slowdown in the economy, which will ultimately put pressure on inflation, which reached the target of 2.0% in August. The Bank of Canada has made three consecutive interest rate cuts since June, and the latest macroeconomic data strengthens the case for a sharper adjustment of –50 basis points. However, employment statistics will still be the deciding factor in decision-making.

The US currency is supported by the speech of the US Fed Chairman Jerome Powell on Monday. The official spoke out against actively reducing the cost of borrowing at the upcoming meetings and proposed limiting it to standard –25 basis points. Against this background, the probability of a cut of 50 basis points, according to the Chicago Mercantile Exchange (CME) FedWatch Tool, is only 35.0%, while before Powell’s speech, it exceeded 50.0%.

Support and resistance

On the daily chart, Bollinger bands are steadily declining. The price range is slightly narrowing, remaining quite spacious for the market activity. The MACD indicator is growing, maintaining a poor buy signal (the histogram is above the signal line). Stochastic is trying to reverse downwards, reacting to the emergence of the “bearish” dynamics yesterday. It is better to wait for the indicator signals to become more precise.

Resistance levels: 1.3500, 1.3524, 1.3550, 1.3582.

Support levels: 1.3475, 1.3457, 1.3440, 1.3419.

Trading tips

Short positions may be opened after a breakdown of 1.3475, with the target at 1.3440. Stop loss — 1.3500. Implementation period: 1–2 days.

Long positions may be opened after a rebound from 1.3475 and a breakout of 1.3500, with the target at 1.3550. Stop loss — 1.3475.