Investing.com - The Canadian Dollar weakened against its U.S. counterpart today, as oil prices fell and rik sentiment remained uncertain ahead of key data this week.
The economic docket is set to include a rate decision from the Bank of Canada and U.S. Nonfarm Payrolls (NFP) on Wednesday, and Canadian employment data due Friday.
The BoC is widely expected to hold rates at 5%, and currently expectations are for an 80% chance that rate cuts begin at the BoC’s June meeting.
Traders will be closely parsing commentary from policymakers and the accompanying press release for further guidance on when the BoC may begin to cut rates. A dovish tilt from the Bank of Canada could see further pressure on the loonie.
Analysts at Interchange Financial note that “The BoC could be laying the groundwork for a potential interest rate cut by leaning slightly towards a dovish tone. This would weaken the Canadian dollar.”
Interchange Financial analysts also note that the loonie could be particularly sensitive to the wording and tone of the BoC’s statement at a time that “The Canadian dollar and US dollar (USD/CAD) currency pairing continues to be heavily influenced by interest rate expectations.”
U.S. ADP employment data on Wednesday will also be closely watched for expectations of rate cuts from the Fed. Traders currently see 70% odds of a Fed rate trim in June - more or less at par with the BoC.
Canadian employment data meanwhile is expected to show an uptick in the employment rate, and the economy adding 20,000 jobs in February - at a slower pace than in January.
On a technical level for the pair, analysts at FXStreet note, “The 1.3600 handle is the immediate near-term technical ceiling, and prices continue to trade on the high side of the 200-day Simple Moving Average (SMA) at 1.3477.”