USD/CAD steady, BoC reports weak business conditions

USD/CAD has posted slight gains on Tuesday. Early in the North American session, USD/CAD is trading at 1.3576, up 0.28% on the day.

Bank of Canada Survey Pessimistic

With no Canadian events on Monday, the Bank of Canada Business Outlook survey was on center stage. The semi-annual publication didn’t shake up the currency markets, which were in a sleepy mood just after the Fourth of July holiday in the United States. Still, the survey is well-respected and investors will be paying attention to the report, which was quite pessimistic about business conditions.

The BoC survey found that business sentiment in Canada was “strongly negative”, even though half of the companies surveyed said they expected sales to recover within 12 months. The bank found that the business sector has been hit hard by the economic shutdown in the wake of Corvid-19, as well as the sharp decline in oil prices. Predictably, the survey found that hiring remains weak, with only 25% of companies planning to hire workers. The survey noted that consumers remain cautious with their spending and that consumer expectations for wage growth are low.

US services sector PMI sparkles

The ISM Non-Manufacturing PMI was unexpectedly strong in June. The PMI jumped from 45.4 to 57.1, its highest level in four months. This figure easily beat the forecast of 50.0, which separates contraction from expansion. The services sector has been hit hard by the lockdown, so the June rebound is a hopeful sign that the economy is in recovery mode.

USD/CAD Fundamentals

Tuesday (July 7)

• 10:00 Canadian Ivey PMI. Estimate 50.2
• 10:00 US JOLTS Job Openings. Estimate 4.80M

Wednesday (July 8)

• 10:30 US Crude Oil Inventories. Estimate -3.2M
• 15:00 US Consumer Credit. Estimate -15.2B

*All release times are EDT

*Key events are in bold

USD/CAD Technical

USD/CAD posted slight gains in the Asian session. The pair gave up some of these gains in the European session but recovered.

• 1.3550 is an immediate support level. It could be tested in the North American session.
• 1.3661 is the next resistance line

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