Loonie Holds Steady as US Dollar Awaits Rate Cut Signal

George Solotarov
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Loonie Holds Steady as US Dollar Awaits Rate Cut Signal

The Canadian Dollar (CAD) is holding its ground near 1.3680 against the US Dollar (USD) on Monday, with both currencies lacking major data catalysts this week.


 

USD Pressured by Lower Rates Outlook: The USD faces resistance around 1.3700 due to market expectations of the Federal Reserve (Fed) cutting interest rates later this year.
  • S&P 500 Gains, Yields Dip: A cautiously optimistic S&P 500 and lower 10-year Treasury yields reflect improved risk appetite and decreased demand for safe-haven assets like the USD.
  • US Dollar Index Stumbles: The US Dollar Index (DXY) struggles above 105.00 after weak US jobs and services data fueled expectations of a dovish shift by the Fed.
  • Canadian Employment Data in Focus: Investors await Canada's April employment data on Friday, which could influence Bank of Canada (BoC) rate cut expectations.

Technical Analysis:

  • The USD/CAD pair is currently trading sideways near 1.3700.
  • A break above this level could signal further USD strength, while a break below could indicate a potential move towards the CAD's advantage.
The near-term direction of the USD/CAD depends on the upcoming US and Canadian economic data, particularly the Fed's monetary policy pronouncements and Canada's employment figures.

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