FxWirePro: USD/CAD recovers from early dip as BoC rate cut bets build

• USD/CAD initially dipped but recovered most of the ground on Monday  as investors looked ahead to a possible interest rate cut by the Bank of Canada later this month..

• Rate cut expectations increased after Friday’s data showed Canada lost 65,500 jobs in August, pushing the unemployment rate up to 7.1%.

• Money markets are pricing in a 92% probability of a 25-basis-point rate cut on September 17, The BoC has kept rates steady at 2.75% at its last three meetings since March.

• Investors also anticipate a U.S. Federal Reserve rate cut on the same day, after Friday’s nonfarm payrolls report confirmed further deterioration in the labor market.

• Immediate resistance is located at 1.3850(50%fib), any close above will push the pair towards 1.3902(Higher BB).

• Support is seen at 1.3761(Sep 5th low) and break below could take the pair towards 1.3712(38.2%fib).

Recommendation: Good to buy around 1.3810, with stop loss of 1.3750 and target price of 1.3900