The US dollar managed to regain momentum over the Canadian dollar after the publication of a strong US jobs report. The next movement of the greenback will be set after the Fed's head's speech.
The Bank of Canada is expected to keep the benchmark interest rate unchanged at 1.75 percent on Wednesday, and later in the day, the Fed will release the notes from its June FOMC meeting. It is anticipated that a rate cut later in the month from the Fed and will keep the CAD as one of the strongest G10 currencies. The BOC is not facing the same pressures as the Fed to lower interest rates, but trade headwinds have not shown signs of dissipating, which will give Poloz plenty to discuss during his press conference. The BOC's Governing Council most recently stated that future policy decisions "will remain data dependent and especially attentive to developments in household spending, oil markets, and the global trade environment.
The CAD Overnight Rate is expected to be unchanged at 1.75%. It will be published following the BOC Monetary Policy Report and BOC Rate Statement. The BOC Press Conference report will be published as well.
Furthermore, after an upbeat jobs report, market participants are guessing whether the Fed will cut its key rate. A strong rebound from a disappointing May report showed a 224,000 gain in June and boosted the US dollar against major pairs. The US dollar remains under pressure due to uncertainty over the Fed's decision on its key rate. Additionally, the White House is ready to open another trade war front, this time with Europe. US-China talks at the G20 did not provide any new details, but a new round of talks is expected. Tariffs against the EU diverted safe-haven flows away from the US dollar and into other options like the Swiss franc, the Japanese yen, and gold. Fed Chairman Jeromy Powell said that the US economy did not change much in the days that followed. But Trump's statements spooked financial markets so decisively, and the threats to the global economy became so palpable, that an interest rate cut of at least 25 basis points has been baked in for the Fed's July 30-31 policy meeting.
Now let us look at the technical view. The price managed to push higher after bouncing off the 1.3050 area. It is expected to pull back towards the dynamic level of 20 EMA or at best 1.3200 area before the bearish trend pushes the price lower towards 1.30 support area. As the price remains below the 1.3300 area, the bearish bias is expected to continue.
