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USD/CAD consolidates post-BoC upsurge to 2-month tops

   “¢   A more dovish BoC policy outlook continues to weigh on CAD.
   “¢   Subdued USD action fails to provide any fresh bullish impetus.
   “¢   Focus now shifts to Friday’s US/Canadian monthly jobs report.

The USD/CAD pair now seems to have entered a bullish consolidation phase and digesting the overnight post-BoC upsurge to just over two-month tops.

Against the backdrop of last week’s dismal Canadian GDP growth figures, the Canadian Dollar nosedived on Wednesday in reaction to the BoC’s more dovish signal regarding the monetary policy outlook.  

In the accompanying monetary policy statement, the Bank of Canada acknowledged the economic slowdown was sharper and more broad-based than initially anticipated and dampened prospects for a rate hike temporarily.

The pair rallied over 100-pips intraday, taking along some short-term trading stops near the 1.3400 handle and seemed unaffected by a subdued US Dollar demand following mixed release of US private sector employment report.

With the greenback extending its sideways consolidative price action on Thursday, sluggish crude oil prices also did little to provide any meaningful impetus to the commodity-linked currency – Loonie and led to a range bound price action.

Moving ahead, today’s relatively thin economic docket, featuring the second-tier release of initial weekly jobless claims from the US, will now be looked upon for some short-term trading opportunities.

The key focus, however, will be on Friday’s closely watched monthly jobs report from the US (NFP) and Canada, which should further assist investors to determine the pair’s next leg of a directional move.

Technical levels to watch

A follow-through buying has the potential to continue lifting the pair further towards reclaiming the key 1.3500 psychological mark en-route 1.3565-70 supply zone. On the flip side, the 1.3400 handle now seems to protect the immediate downside, which if broken might turn the pair vulnerable to slide further towards testing the 1.3355-50 support zone.

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