The Canadian labour market data beat expectations across the board with the market now seeing basically a 50/50 chance of a rate cut in June. Is this a major change though? Not at all. The gamechanger will likely be the CPI report due on May 21st when we will know if the BoC will indeed deliver the first cut in June or skip that month and wait for July.
USDCAD 15 minutes
From a trading perspective, since this is not a gamechanger, the CAD gains should be limited as the market generally fades the first spike if it’s not such a big deal. The CAD bulls might want to wait for a pullback into the 1.3690 region where they will have a better setup to structure a short trade as a break and extension to the upside should invalidate completely the bearish idea.
On the downside, the maximum the pair might run today is into the 1.3620 region where we have the low of the ADR and the key support zone. That’s where the buyers might want to structure their long positions. Right now, we are right in the middle, so from a risk management perspective there’s no trade.