On September 17, the Bank of Canada cut its key interest rate by 25 basis points, from 2.75% down to 2.50%, in line with market expectations. Recent Canadian economic data reveal signs of weakness:
- Employment change plunged by 65,500 jobs, far below expectations (4,900) and the previous reading (40,800).
- The unemployment rate rose to 7.1%, higher than expected (7.0%) and last reading (6.9%).
- The Ivey PMI dropped to 50.1 points, well under expectations (53.1) and the previous 55.8.
- Consumer prices increased 1.9% year‑on‑year, below expectations of 2.0% but above the prior 1.7%.
- Retail sales declined 0.8% month‑on‑month, matching expectations but weaker than the previous 1.6% growth.
The USD/CAD pair continues to trend upward. On Friday, it reached 1.3959, its highest level since May 20, 2025, and remains above 1.3900. However, the pair is still down around 3% since the start of the year.
From a technical perspective:
- Support levels: A break below the pivot at 3923 could open the way to support zones at 1.3898, 1.3877 and 1.3852.
- Resistance levels: Should the pair overtake the pivot upward, resistance may lie at 1.3944, 1.3969, and 1.3990.
Technical indicators:
- The Relative Strength Index (RSI) is currently around 61, indicating positive momentum.
- The positive Directional Movement Index (+DMI) reads 26, against 15 for –DMI, which suggests a clear dominance of buyers.
- Moreover, a bullish crossover between the MACD line and its signal line confirms ongoing upward momentum for USD/CAD.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
