The Canadian dollar is unchanged at the start of the new trading week. In the European session, USD/CAD is trading at 1.3550, up 0.03% on the day.
Canadian Dollar Flexes Muscles
The Canadian dollar enjoyed its best week in a month, as USD/CAD slipped 1.0 percent. Investors remain attracted to the Canadian dollar, despite the severe economic conditions around the globe due to the Covid-19 pandemic. The conventional wisdom is that minor currencies such as the Canadian dollar are vulnerable in times of crisis because risk appetite is low. However, to the surprise of many analysts, the safe-haven US dollar has sagged, while the Canadian dollar has had a decent second quarter, gaining 3.5% against the greenback. Investors shrugged off a disastrous Canadian GDP release in June, as the economy shrank by 11.6 percent.
US services sector in focus
Later on Monday, the US releases the ISM Non-Manufacturing Index, which should be treated as a market-mover. The services sector has been hit hard by Covid-19, as the lockdown forced the shutdown of businesses across the country. The PMI has recorded two successive releases below the 50-level, which points to contraction. Analysts expect the index to improve to 50.0, up from 45.4 beforehand. As well, the US will publish the final estimate for Services PMI. The initial estimate came in at 46.7, and the final reading is expected to be upwardly revised to 47.0 points. The index is expected to remain in contraction territory but has rebounded nicely since a dismal reading of 26.7 in April.
USD/CAD Fundamentals
Monday (July 6)
- 9:45 US Final Services PMI. Estimate 47.0
- 10:00 US ISM Non-Manufacturing PMI. Estimate 50.0
- 10:30 BoC Business Outlook Survey
Tuesday (July 7)
- 10:00 Canadian Ivey PMI. Estimate 50.2
- 10:00 US JOLTS Job Openings. Estimate 4.80M
*All release times are EDT
*Key events are in bold
USD/CAD Technical
USD/CAD is showing little movement on Monday, ahead of the North American session. The pair posted small losses in the European session but recovered in North American trade.
- 1.3550 is fluid. Currently, it is an immediate support line
- 1.3661 is the next resistance line