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Greenback Pushes Canadian Dollar above 1.33

The Canadian dollar remains under pressure in the Tuesday session. Currently, the pair is trading at 1.3337, up 0.25% on the day. On the release front, there are no Canadian events. The highlight in the U.S. is ISM Non-Manufacturing PMI, which is expected to rise to 57.4 points. On Wednesday, the U.S. releases ADP nonfarm payrolls. All eyes will be on the Bank of Canada, which is expected to hold the benchmark rate at 1.75%. Canada will also release trade balance and Ivey PMI.

With the Bank of Canada expected to stay on the sidelines at its policy meeting, the spotlight will be on the BoC rate statement. Policymakers have said it expected the economic slowdown in Canada to be temporary, but a sluggish Q4 has raised concerns about the health of the economy. The BoC hiked rates three times last year, and this may have hurt consumer spending, which was weak in the fourth quarter. With economic growth headed in the wrong direction and inflation levels below the BoC target of 2.0%, policymakers are unlikely to raise interest rates in the near term.

After a disappointing week, the Canadian dollar continues to lose ground. On Monday, USD/CAD touched a high of 1.3352, its highest level since late January. The Canadian dollar slipped almost 1 percent on Friday, after GDP declined in December for a second straight month. The economy was stagnant in Q4, with a negligible gain of 0.1%. For all of 2018, the economy expanded 1.8%, shy of the BoC target of 2.0%. The BoC hiked rates three times last year, and this may have hurt consumer spending, which was weak in the fourth quarter. With economic growth headed in the wrong direction and inflation levels below the BoC target of 2.0%, policymakers are unlikely to raise interest rates in the near term.

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