By Ketki Saxena
Investing.com – The Canadian dollar weakened against its US counterpart today, as treasury yields climbed and risk sentiment remained uncertain ahead of an anticipated 25 bps hike from the US Federal Reserve. The greenback was also supported by better than expected April ISM Manufacturing PMI, which rose to 47.1 from 46.3 - but still remained in contractionary territory (a reading under 50).
The Canadian dollar meanwhile remained under pressure by uncertain risk sentiment, and a slide in crude prices as Fed worries remained at the forefront, and as China’s manufacturing activity unexpectedly declined in April, raising worries of demand destruction in the world’s top importer of the commodity.
The Canadian dollar received little impetus from a better than expected PMI, which rose to a seasonally adjusted 50.2 in April from 48.6 in March, though orders remained under pressure due to economic uncertainty
On a technical level for the pair, analysts at FXStreet note “bulls remain in the picture for a run towards 1.3700 in the near term so long as the following conditions are met: 1. The bulls need to stay committed to the counter-trendline support. 2. Bulls need to guard 1.3500 3. Bulls need to get above 4-hour 1.3580 structure and then 1.3650-70.”
On a fundamental level for the pair, the trend on the Canadian dollar remains bearish, as risk-sentiment remains weary due to renewed fears around regional banks, despite JP Morgan’s buyout of First Republic Assets, and the outlook for crude remains uncertain.
However, analysts at Scotiabank (TSX:BNS) note that “Friday’s CFTC report showed investors have reduced the build-up of (significant) net CAD shorts” - but that a somewhat “bearish bias overall persists”.
Up next for the pair, all eyes will be on the Fed’s monetary policy announcement on Wednesday, and plenty of impetus later in the week, including Canadian trade data on Thursday, and both Canadian and US employment reports out on Friday.