USD/CAD Plunged Amid Weak US Data.

Fundamental Analysis

* Data Dive: The Canadian Dollar has strengthened against the greenback following a significant sell-off in the dollar due to disappointing U.S. economic data. The ADP Employment report revealed that private sector job growth unexpectedly slowed in June, with employers adding 150K jobs, missing the forecast of 160K and falling short of the revised prior figure of 157K. This has increased uncertainty about the labor market’s future. Additionally, the ISM Services PMI report showed a sharp contraction in the service sector, with the PMI dropping to 48.8, well below the expected 52.5 and the previous 53.8. A PMI reading below 50.0 indicates contraction in service activities. Other sub-components, including the Prices Paid and New Orders Index, also weakened compared to their previous readings.

Technical Analysis

* Technical Breakout: USDCAD was traded lower following prior breakout below the previous support level 1.36650. MACD which illustrate strong bearish momentum signal suggest the pair to further extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards 1.36050. Conversely, a potential correction is also to be expected and the price could head towards 1.36650.

Understand how technical analysis can help you in this trading opportunity.

Potential Risks

Looking ahead, investors are eagerly awaiting the upcoming US Nonfarm Payrolls (NFP) report for June, scheduled for release on Friday. This report will shed light on the current state of the labor market. Additionally, attention will also be on the Canadian Employment report for June, also due on Friday. Robust employment figures would reduce expectations of future rate cuts by the Bank of Canada (BoC), while weaker numbers would increase the likelihood of such cuts.

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Monitoring

Stay updated on US and Canada data, central bank update and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.