Analysts believe that this week will be difficult for the Canadian dollar, which will be disappointed by the continuous decline of the USD/CAD pair.
A slowdown in production growth in the country facilitates the downward trend of the Canadian currency. Today, experts recorded a decline in the IVEY business activity index – from the previous 54.4 points to 52.7 points. The current data greatly disappointed analysts who expected a rise to 54.7 points. Moreover, the market was especially alarmed by the employment indicator, which fell from 50.3 points to the current 48.1 points. Based on specialists' calculations, the employment growth rate will continue to decline in December before this year ends.
On the other hand, the loss of the Canadian dollar's won positions raised experts' concerns. Against this background, relatively positive macro statistics were released to counterbalance minor difficulty. It should be recalled that last week, Canadian companies reported on the creation of an impressive number of jobs – 62 thousand, which led to the reduction of the unemployment rate from the previous 8.9% to 8.5%. According to analysts, this factor will positively affect CAD's further dynamics.
Experts consider the currency decline of the USD/CAD pair to the lows of two years ago as a temporary phenomenon. Today, the USD/CAD pair is moving around the range of 1.2793-1.2794. The Canadian dollar's dynamics can be influenced by the decision of the Bank of Canada regarding the existing monetary policy (MP). In connection this, analysts are confident that the regulator will not dramatically change its parameters.
Currently, the Canadian dollar is the leading commodity currencies, receiving strong support from the recent growth in oil prices. It can be recalled that OPEC + representatives expect a recovery in demand for hydrocarbons in 2021. In view of this, it should be noted that black gold holds the leading position among Canada's export goods, so any increase in oil prices brings profit to the country's energy companies and its economy.
Experts believe that the USD/CAD pair will slightly decline in the coming weeks, but it is likely to recover at the beginning of 2021. At the same time, they summarized that this pair's potential pullback to the level of 1.2900 is favorable for opening short positions.