Ella 
In early European trading on Wednesday, USD/CAD ended two consecutive gains. USD/CAD still faces resistance near the 100-day moving average of 1.3600. USD/CAD has attracted some sellers despite the U.S. dollar index recovering. USD/CAD is currently trading around 1.3575, down 0.12% on the day.
U.S. data on Tuesday showed that the U.S. ISM services purchasing managers’ index was 52.7 in November, compared with the previous value of 51.8, which was better than the expected value of 52.0. Meanwhile, U.S. JOLTS labor force data released on Tuesday fell short of expectations. The U.S. Job Openings and Labor Turnover Survey (JOLTS) data for October showed that U.S. job openings fell by 617,000 to 8.733 million in October. The report suggests that U.S. labor market conditions are further easing.
While maintaining its stance on monetary policy, the Federal Reserve (FED) said it would not rule out the possibility of further tightening. However, market participants believe that the Fed has ended its interest rate hike cycle and will begin cutting interest rates in March next year. This may therefore limit the USD’s upside and be bearish for USD/CAD.
In terms of the Canadian dollar, the Bank of Canada (BOC) will announce an interest rate decision on Wednesday. Bank of Canada Governor Tiff Macklem said high interest rates have cooled the overheating economy and removed inflationary pressures. Marklem believes that the central bank may be doing enough to curb inflation, but if inflation persists, the Bank of Canada will raise interest rates again. The Bank of Canada is expected to hold interest rates steady at 5.0% at its December meeting.
Meanwhile, a rebound in oil prices could boost the commodity-linked Canadian dollar as Canada is a major oil exporter to the United States.
Market participants will focus on U.S. JOLTs job vacancies and unit labor costs (Q3). Focus will shift to the Bank of Canada’s interest rate decision later on Wednesday. These events can trigger market volatility and provide direction for the USD/CAD pair.
