Canadian dollar in panic: USD/CAD on the verge of collapse


The beginning of the current week was not favorable for the Canadian dollar: the USD/CAD pair plunged against the background of not too positive data from the US and Canada. Labor market reports from these states have sharply pulled down Canada's currency.

The publication of the US Employment Report last Friday slightly weighed on the US currency. However, the dollar eventually managed to recoup the losses. The situation with the Canadian dollar is more complicated, analysts say. Despite the creation of a sufficient number of jobs in Canada (81 thousand), the loonie was unable to hold on to its positions.

According to analysts, the results of this month became the second most powerful in 2019 and some of the best over the past five years. They confirm the neutral position of the regulator. At a recent meeting, the Bank of Canada announced the desirability of ongoing monetary stimulus. At the moment, it will remain at the same level, the central bank of Canada emphasized. At the same time, the leadership of Canada recognizes that the escalation of the trade conflict between the United States and China significantly affects the economy of the state, and this effect cannot be called positive. Authorities allow easing monetary policy, but not in the near future.

According to analysts' forecasts, we should expect further weakening of the USD/CAD pair and potential testing of the mark below 1.3155. Currently, the Canadian currency is trading at 1.3157–1.3162. This week, the pair's sharp fall and the breakdown of the 1.2905 area are not ruled out. In the event of a negative scenario, a breakdown of the lower boundary of the channel and a continuation of the fall below the level of 1.2545 are possible. However, in the event of a positive development of events, the pair's growth and closing above the level of 1.3495 are not excluded.

The material has been provided by InstaForex Company -