CAD has been broadly stronger after the rate hike. The USD/CAD dipped below 1.2500 support area, bouncing from 1.30 resistance level. Recently USD has gained over CAD with positive economic reports like the NFP, Average Earnings and Unemployment rate. The bullish momentum is expected to last for certain period and then CAD is expected to take over again with the bearish pressure in this pair as the BOC actions and market sentiment are still in favor of CAD. Today the Housing Starts report from Canada is going to be published which is expected to decrease to 204k from the previous figure of 213k. Besides, the Building Permits report is expected to be negative at -1.8% from the previous positive value of 8.9%. On the USD side, today the Prelim Nonfarm Productivity is expected to rise to 0.7% from the previous value of 0.0%. At the same time, the Prelim Unit Labor Cost is expected to decrease to 1.1% from the previous value of 2.2%, and the Final Wholesale Inventories report is expected to be unchanged at 0.6%. Furthermore, the Crude Oil Inventories report is expected to have greater deficit at -2.6M from the previous figure of -1.5M. To sum up, CAD is currently expected to show more weakness because of the economic forecasts and the current market sentiment, whereas USD is expected to have an upper hand over CAD and gain further. The Bank of Canada is still hawkish as well as the long-term market sentiment of the currency so If Canada’s report comes out positive and better than expected, then we might see CAD gaining over USD again with an impulsive momentum in the coming days.
Now let us look at the technical view. The price is currently correcting itself at the edge of 1.2700 resistance level and with some bullish rejection along the way signals the bearish presence in the market off the level which is expected to lead to further bearish momentum in this pair with target towards 1.2450 support area in the coming days. As the price remains below 1.2700, the bearish bias is expected to continue further
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