- The Canadian Dollar gave up near-term gains on Tuesday.
- Loonie markets are closed for the Canada Day holiday.
- US is poised to pass Trump budget bill, but roadblocks still remain.
The Canadian Dollar (CAD) pared away early-week gains on Tuesday, slipping back against the recovering US Dollar (USD) as Loonie traders take the day off in observance of the Canada Day national holiday. The rest of the week will be both volatile and short, with US Nonfarm Payrolls releasing a day early on Thursday and a US market holiday on the books for Friday.
The Loonie has been on a halting recovery swing against the Greenback in the near-term, but a deeply-battered US Dollar could be poised for a turnaround. Recent economic data from Canada will likely push the Bank of Canada (BoC) into a fresh batch of rate cuts, which could further weaken the Canadian Dollar and put USD/CAD on a path toward higher volatility as the two currencies race to the bottom.
Daily digest market movers: Loonie loses steam amid Canadian holiday
- The Canadian Dollar pared recent gains, falling back around one-third of one percent against the US Dollar on Tuesday.
- USD/CAD remains trapped below the 1.3700 handle as the Greenback weakens across the board, but markets could be poised for a turnaround with the Dollar Index (DXY) hanging around multi-year lows.
- Canadian markets are shuttered for a holiday on Tuesday, leaving USD/CAD at the mercy of US Dollar flows entirely.
- US Dollar strength is climbing as the US inches toward passing President Donald Trump’s deficit-swelling federal spending and budget bill, which will add trillions to the US’s federal deficit in the coming years.
- US NFP data will be landing a day early this week, scheduled for a Thursday release with US markets set to be closed for a national holiday on Friday.
Canadian Dollar price forecast
Despite near-term gains for the Loonie pushing USD/CAD down from its last swing high into 1.3800, CAD gains remain capped. The pair is still holding north of multi-month lows near 1.3550, but a snap in either direction could establish a new trend from here. Technical oscillators suggest the near-term bearish trend could still have some legroom, but Loonie bulls are struggling to keep USD/CAD falling from the 50-day Exponential Moving Average (EMA) near 1.3790.
USD/CAD daily chart
