USD/CAD Gyrates as Financial institution of Canada Reduces QE, Upgrades Outlook

CANADIAN DOLLAR PRICE OUTLOOK: USD/CAD WHIPSAWS ON BANK OF CANADA RATE DECISION

• Canadian Greenback is buying and selling on its again foot instantly following the newest BoC price resolution
• The Financial institution of Canada leaves charges unchanged and reduces its weekly tempo of QE to C$2-billion
• USD/CAD value motion recoiled increased off key assist with assist from a softer Canadian Greenback

Canadian Greenback bears are flexing their muscle tissues and attempting to steer USD/CAD value motion increased this morning. Loonie softness is coming regardless of the newest financial coverage replace from the Financial institution of Canada simply crossing market wires, which revealed a notable discount within the central financial institution’s QE program.

The BoC determined to scale back weekly asset purchases by one-third to C$2-billion, although this was largely consistent with expectations. BoC officers left charges unchanged and likewise reiterated projections for financial slack to be absorbed within the second half of subsequent 12 months with outlook for 2022 GDP and inflation each receiving modest upgrades. That stated, the Financial institution of Canada’s financial coverage report additionally detailed a slight downgrade to its 2021 GDP forecast.

USD/CAD PRICE CHART: 4-HOUR TIME FRAME (28 JUNE TO 14 JULY 2021)

USD/CAD value motion whipsawed in response to those headlines as preliminary Canadian Greenback energy was rapidly unwound. This appeared to observe a knee-jerk response to key technical assist across the 1.2425-1.2450 value zone. Yields on Canadian Authorities Bonds additionally felt some downward stress and are probably contributing to a softer Loonie. That might be monitoring the decline in BoC price hike odds by year-end, which dropped to a 32% chance from 39% pre-BoC.

— Written by Wealthy Dvorak, Analyst for DailyFX.com

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