Investing.com – The Canadian dollar weakened against its U.S. counterpart today as oil prices fell and investor sentiment remained uncertain ahead of key data this week.
The economic list should include the interest rate decision from the Bank of the United States and the United States. Number of jobs in non-farm sector (NFP) on Wednesday, and in Canada on Friday.
The Bank of Canada is expected to keep rates at 5%, and there is currently an 80% chance that rate cuts will begin at the Bank of Canada’s June meeting.
Traders will be closely analyzing policymakers’ comments and the accompanying press release for further guidance on when the Bank of Canada might begin cutting rates. A dovish stance from the Bank of Canada could lead to further pressure on the Canadian dollar.
Analysts at Interchange Financial note that “the Bank of Canada may be laying the groundwork for a potential rate cut with a slightly dovish tone. It would weaken.”
Analysts at Interchange Financial also note that the Canadian dollar may be particularly sensitive to the wording and tone of the Bank of Canada’s statement at a time when “the CAD/USD currency pair continues to be heavily influenced by interest rate expectations.”
On Wednesday, the US will also be closely monitoring expectations for a rate cut by the Fed. Traders currently see a 70% chance of a Fed rate cut in June – more or less in line with the Bank of Canada.
Meanwhile, Canadian employment data is expected to show a rise in employment levels, with the economy adding 20,000 jobs in February, a slower pace than in January.
On the technical level of the pair, FXStreet analysts note: “1.3600 is the immediate near-term technical ceiling and prices continue to trade on the upper side of the 200-day simple moving average (SMA) at 1.3477.”