USD/CAD Outlook: Cautious Sentiment Forward of US Election Day…

• Most market individuals are ready for the end result of the US presidential election.

• Canada’s manufacturing sector expanded additional in October.

• Knowledge revealed that the US economic system added solely 12,000 jobs in October.

The USD/CAD outlook reveals warning forward of the much-anticipated US presidential election. The Canadian greenback remained regular as traders digested Friday’s strong manufacturing enterprise exercise report. However, the greenback eased after Friday’s employment figures solidified bets for a November Fed charge lower.

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There are solely two potential outcomes for the US election: a Democratic win for Kamala or a Republican win for Trump. Analysts predict a continuation of present insurance policies with Kamala. Subsequently, the outlook for the economic system will doubtless stay unchanged, permitting the Fed to finish its mandate by chopping rates of interest. This might result in a decline within the greenback and USD/CAD. 

However, Trump has proposed some adjustments to tariffs that may harm the Canadian greenback. Canada exports most of its merchandise to the US, so tariffs on imported items would harm Canada’s economic system and the loonie. On the similar time, consultants consider Trump’s insurance policies will enhance inflation, complicating the outlook for Fed charge cuts. On this case, the greenback would rally. 

In the meantime, information on Friday revealed that Canada’s manufacturing sector expanded additional, with the PMI reaching 51.1 in October. A rebound within the economic system would possibly ease stress on the Financial institution of Canada to decrease borrowing prices. 

Within the US, information revealed that the economic system added solely 12,000 jobs in October. It was a major drop from the earlier studying of 254,000. Subsequently, it elevated the chance of a charge lower in November.

USD/CAD key occasions at the moment

The pair will begin the week quietly, as there are not any key occasions coming from Canada or the US.

USD/CAD technical outlook: Bears strengthen inside the bullish wedge

On the technical facet, the USD/CAD value is buying and selling in a bullish wedge sample. Nonetheless, the value has damaged beneath the 30-SMA, indicating a shift in sentiment. On the similar time, the RSI has damaged beneath 50, suggesting stronger bearish momentum. 

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Bullish momentum peaked in the beginning of the wedge sample. Since then, bulls have progressively misplaced enthusiasm, resulting in a bearish RSI divergence. A break beneath the wedge help would enable the value to revisit the 1.3825 help stage and certain begin a downtrend.

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