USD/CAD consolidates around 1.3600, investors sidelined ahead of BoC monetary policy
- USD/CAD remains sideways around 1.3600 as the US and Canadian markets will remain closed on Monday on account of Labor Day.
- The US Dollar maintains its bullish mainstay as job growth remained steady in August.
- The BoC is expected to keep interest rates unchanged at 5% on Wednesday.
The USD/CAD pair remains sideways after a vertical rally near the round-level resistance of 1.3600 in the late European session. The Loonie asset is expected to remain lackluster on Monday as the US and Canadian markets will remain closed on account of Labor Day.
S&P500 futures generate some gains in Europe, portraying strength in the risk-appetite theme. The US Dollar Index (DXY) faces nominal selling pressure near a four-day high at 104.20 while the upside is still favored as investors remain cautious that the Federal Reserve (Fed) will keep interest rates higher for a longer period.
The US Dollar maintains its bullish mainstay as hiring momentum remained steady in August despite restrictive interest rate policy by the Fed. As per the US Nonfarm Payrolls (NFP) report, the job market witnessed a fresh addition of 187K new employees, which was higher than expectations of 170K and July's reading of 157K. However, the higher Unemployment Rate and slower wage growth boost hopes of the Fed announcing a pause in its current tightening spell.
Meanwhile, oil prices turn sideways after a massive rally near $85.50 as Saudi Arabia is expected to extend supply cut by one million barrels per day from October. In an already shrinking oil market, tight supply expectations keep oil prices on fire.
It is worth noting that Canada is the leading exporter of oil to the United States and higher oil prices will support the Canadian Dollar.
This week, the major trigger will be the interest rate decision by the Bank of Canada (BoC), which will be announced on Wednesday. BoC Governor Tiff Macklem is expected to keep interest rates unchanged at 5% as job growth remains slow.