- The Canadian Dollar added a thin 0.5% as the Greenback drifts lower.
- Upbeat US employment data is sending risk appetite higher.
- Meaningful Canadian data remains limited until Friday.
The Canadian Dollar (CAD) tested higher against the Greenback on Wednesday, chalking in a scant one-fifth of one percent gain following the early week’s sharp recovery from multi-decade lows. Us data dominated market headlines during the midweek market session, and a general improvement in trader risk appetite is stepping down on the US Dollar, giving the Loonie a leg up.
Economic data from Canada is strictly low-tier until Friday’s labor print. US Purchasing Managers Index (PMI) figures missed the market on Wednesday, but the key reading for US data came from ADP jobs change data, which showed a potential upswing in US net job gains. Traders are keeping a close eye on employment preview numbers in the run-up to Friday’s Nonfarm Payrolls (NFP) report.
Daily digest market movers: Canadian Dollar gains ground on sentiment uptick
- The Canadian Dollar gained a few points on easing Greenback flows.
- Canadian Trade Balance numbers for December rebounded, but less than expected. Markets overwhelmingly overlooked the data print.
- US ISM Services PMI survey results from January softened to 52.8 from a revised 54.0, missing the forecast 54.3.
- US ADP Employment Change swung higher to 183K, stepping over the previous revised 176K and beating the 150K forecast.
- Canadian labor figures are due on Friday, but market attention will be fully focused on US NFP jobs figures due at the same time.
Canadian Dollar price forecast
The Canadian Dollar (CAD) managed to eke out thin gains on Wednesday, dragging USD/CAD back down to the 50-day Exponential Moving Average (EMA) near the 1.4300 handle. Loonie traders remain aware that any gains on the CAD side are coming from generalized weakness in USD flows, but gains are gains and the Loonie has recovered solidly from 21-year lows set earlier this week.
The downside of the CAD’s rebound is USD/CAD is once again back into a congestion range as the pair grinds through a volatile but immovable sideways channel. Momentum is unlikely to meaningful break through the bottom near 1.4000, and the technical ceiling remains in place near 1.4500, albeit with some new holes.
