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Forex - USD/CAD slips lower, but downside seen limited

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Shutterstock photo - - The U.S. dollar slipped lower against its Canadian counterpart on Wednesday, but losses were expected to remain limited as concerns over the prospect for global economic growth continued to weigh on market sentiment.

USD/CAD hit 1.3217 during early U.S. trade, the session low; the pair subsequently consolidated at 1.3224, edging down 0.26%.

The pair was likely to find support at 1.1159, the low of August 31 and resistance at 1.1366, the high of August 27.

In the U.S. payroll processing firm ADP said Wednesday that non-farm private employment rose by 190,000 last month, below expectations for an increase of 201,000. The private sector created 177,000 jobs in July, whose figure was downwardly revised from a previously reported increase of 185,000.

The disappointing data indicated that the Federal Reserve could hold off hiking interest rates at its upcoming policy meeting later this month.

Investors were looking ahead to Friday's U.S. jobs report for August, for more indications on the strength of the job market and the likelihood of a near-term interest rate hike by the Fed.

Overall market sentiment remained cautious after Tuesday's run of disappointing manufacturing data added to fears over the global economic outlook.

Economic reports showed that China's factory sector contracted at the fastest rate in three years, while manufacturing activity in Europe and the U.S. was also weaker than expected.

The loonie was higher against the euro, with EUR/CAD dropping 0.71% to 1.4849.

The outlook for the Canadian dollar remained clouded after official data on Tuesday showed that the economy contracted by an annualized 0.5% rate in the second quarter.

While that was better than economists' forecast for a decline of 1.0% a revision showed the first quarter's contraction was 0.8%, steeper than initially estimated.

Two consecutive quarters of contraction marks a technical recession and the Bank of Canada has cut interest rates twice this year in a bid to shore up growth.

The economy grew 0.5% in June from a month earlier, beating expectations for a growth rate of 0.2%, after a contraction of 0.2% the previous month. offers an extensive set of professional tools for the financial markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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