- It is clear that Trump will be the next president.
- Economists forecast slower job growth in Canada.
- The market focus is shifting to the FOMC policy meeting.
The USD/CAD price analysis indicates a sudden surge in bullish momentum as Trump takes the lead in the US presidential election. Some news outlets have already shown that Trump won the election, which has boosted the dollar. Meanwhile, the Canadian dollar was vulnerable against the dollar ahead of domestic employment figures.
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After weeks of speculation, the results are finally out, and it is more apparent that Trump will be the next president. Trump has proposed tariff and tax changes that will likely be inflationary. Consequently, the Fed might have to rethink its policy outlook to a less dovish. This, in turn, will boost treasury yields and the dollar.
At the same time, higher tariffs on imported goods will have a significant impact on the Canadian dollar. Canada’s economy exports nearly 75% of its goods to the US market. Therefore, tariffs would affect exports and hurt the economy.
Meanwhile, market participants expect employment figures from Canada on Friday. Forecasts show slower job growth, with the economy likely adding 27,900 jobs. Meanwhile, the unemployment rate might increase from 6.5% to 6.6%. Weaker-than-expected figures might push the Bank of Canada to implement another massive rate cut. On the other hand, if the economy adds more jobs than expected, the Canadian dollar will climb.
Market focus is slowly shifting from the US presidential election to the FOMC policy meeting. The US Central Bank will meet on Thursday and likely cut rates by 25-bps. However, traders will pay closer attention to the messaging on future rate cuts.
USD/CAD key events today
Market participants will absorb the outcome of the US election as there won’t be any other key events.
USD/CAD technical price analysis: Bears struggle to keep control
On the technical side, the USD/CAD price has bounced higher after finding support at the 1.3825 key level. The price made a bullish engulfing candle, indicating a surge in bullish momentum.
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However, before this, the price had broken out of its bullish wedge pattern. The break indicated a change in control from bulls to bears. However, if they fail to keep the price below the 22-SMA, it might revisit the 1.3951 resistance level. A break above would signal a continuation of the bullish trend.
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