USD/CAD: Canadian dollar on back foot amid muted economic data and dovish BOC talk
- CAD under pressure on muted Canadian economic data.
- BOC may take a cautious approach in its rate hike stance in the coming days.
USD/CAD is now trading around 1.2550 in New York session, jumping up almost 0.5% on muted Canadian economic data coupled with some dovish talks by the Bank of Canada (BOC) yesterday. CAD is on the back foot despite widespread weakness in US dollar and some recovery in oil.
Canadian Manufacturing Sales for December came muted at -0.3%m/m on Friday against market expectations of +0.2% (prior: +3.8%) and core component also flashed as subdued at -0.4%. This is not a great picture for the Canadian economy coupled with tepid employment data for January released few days ago.
The Bank of Canada also sounds somewhat dovish on Thursday with Schembri's comments on BOC taking a cautious approach to interest rate hikes amid subdued Canadian economic activity, high house hold debt levels, muted wage growth and inflationary pressures.
Technically, for USD/CAD, the area of 1.2450 is now a vital support now and it need to sustain over 1.2590 for 1.2710 zone in the coming days.