USD/CAD Plunges Below 1.3550 as Bank of Canada Cuts Rates Again
The USD/CAD pair has taken a sharp dive below the key support level of 1.3550 after the Bank of Canada (BoC) announced a 25 basis points (bps) rate cut, bringing rates down to 4.25%. This move was widely expected and comes as the Canadian economy seeks a boost in liquidity to counter weakening growth prospects.
On the other hand, the US Dollar is facing pressure following disappointing US JOLTS Job Openings data for July, which showed a significant drop in job vacancies. This has raised concerns about the US job market and has led to a decline in the US Dollar Index (DXY).
The recent weak US ISM Manufacturing PMI data for August has also fueled expectations of a more aggressive policy-easing stance by the Federal Reserve. The likelihood of a 50-bps rate cut in September is currently at 39%, with the majority expecting a 25-bps reduction.
Looking ahead, investors are eagerly awaiting the US Nonfarm Payrolls (NFP) data for August, which will provide further insight into the state of the labor market. With the Fed’s focus shifting towards job preservation, this data release will be closely monitored.
Overall, the recent developments in both the Canadian and US economies have had a significant impact on the currency markets, with the USD/CAD pair and the US Dollar Index facing downward pressure. Investors should stay informed and be prepared for potential market volatility in the coming days.