Fundamentally, the greenback gained strength against the Canadian dollar after domestic employment data indicated that the country’s central bank will leave rates on hold at its upcoming policy meeting. Statistics Canada reported that the economy lost 9,400 jobs last month, compared to expectations for jobs growth of 20,000. The Canadian unemployment rate also ticked up to 7.1% from 7.0% in May, against expectations of an unchanged reading. Reports had also showed that Canadian IVEY PMI declined from 51.3 to 46.9 at the beginning of the week, showing contraction in the loonie’s economy.
The poor data fueled expectations that the Bank of Canada will leave rates unchanged at 1.0% at Wednesday’s meeting and stick to its dovish stance on monetary policy.
Weekly bias remains on the upside as divergence is seen on the 4 hours time-frame MACD and RSI with also 21 EMA about to cross 55 EMA. As long as supports 1.0 6193 holds, bias remains on the upside, a break of 1.07504 resistance will trigger more demand to 1.08900. However the market seems to be over bought on the 4 hours time-frame stochastic. So i will suggest a decent retracement and look for a price action pattern which could produce a reasonable risk to reward trade.
Key economic indicators investors would be watching out for this week are U.S retail sales, Canadian Monetary Policy Report/ Rate Statement, and Canadian Core CPI