Canadian Dollar gets a push from Fed cuts but still hobbled

• The Canadian Dollar was given a boost from Fed-weakened Greenback.
• Canada remains under-represented on the economic calendar.
• Broader markets remain more interested in other avenues following Fed cut.

The Canadian Dollar (CAD) remains overall weaker on Thursday, though the CAD was able to eke out a stronger stance against the Greenback, with the USD getting pummeled after the Federal Reserve (Fed) cut interest rates for the first time in four years by an outsized 50 bps.

Canada is in a lull between key data releases after having printed the latest Consumer Price Index (CPI) figures earlier in the week. All that remains on the economic data docket for the CAD this week is Friday’s mid-tier Retail Sales figures from July, far too late for anybody to do anything about it. Bank of Canada (BoC) Governor Tiff Macklem is also slated to make an appearance on Friday, but the limited scope of the speech is unlikely to draw much bluster.

Daily digest market movers

• The Canadian Dollar is overall weaker on an under-performing Thursday, but still managed to eke out roughly one-third of one percent against the US Dollar.
• The Fed’s 50 bps jumbo cut this week was sold as a “recalibration” by Fed Chair Jerome Powell, who spun it as an advance move to shore up the US labor market, rather than a snap reaction to deteriorating economic indicators in the US.
• The BoC’s Governor Macklem will be giving a speech early Friday at the National Bureau of Economic Research Economics of Artificial Intelligence Conference, in Toronto. It is unlikely that much discussion of monetary policy will come out of it.
• Canadian Retail Sales from July are expected to hold steady on an annual basis of around 0.3% YoY.
• Canadian CPI figures released earlier this week did little to galvanize market confidence in the state of the Canadian economy after headline inflation sunk to 2.0% YoY from the previous 2.5%.

Canadian Dollar price forecast

The Canadian Dollar found a little bit of juice to gain ground against the Greenback on Thursday, gaining around 0.35%, but any CAD strength is purely a result of USD selling and hasn’t bled over to any other major currencies. USD/CAD has eased lower on broad-market risk appetite, pulling the pair down from recent congestion just south of the 200-day Exponential Moving Average (EMA) near 1.3600. 

However, extended short pressure remains a risky play with the pair trading so close to August’s swing low into 1.3450, and the high side looks equally over-populated as technical resistance remains stiff above 1.3600.

USD/CAD daily chart