CANADIAN DOLLAR OUTLOOK: USD/CAD PRICE ACTION EXTENDS SLIDE IN WAKE OF BOC INTEREST RATE DECISIONUSD/CAD falls to session lows as
CANADIAN DOLLAR OUTLOOK: USD/CAD PRICE ACTION EXTENDS SLIDE IN WAKE OF BOC INTEREST RATE DECISION
- USD/CAD falls to session lows as Loonie beneficial properties instantly after the BoC charge choice
- Financial institution of Canada leaves its benchmark rate of interest unchanged at 0.25% as anticipated
- Canadian Greenback may face headwinds if BoC Governor Macklem jawbones the Loonie
The Canadian Greenback is spiking to session highs following the most recent Financial institution of Canada rate of interest choice. As extensively anticipated, BoC officers agreed to depart its in a single day goal charge at 0.25% and QE program unchanged at C$4-billion per week. The inflow of USD/CAD promoting strain possible follows foreign exchange merchants pricing out the slight potential there was for a ‘micro-cut’ to the benchmark rate of interest.
Parsing the small print of the Financial institution of Canada press launch, we see the central financial institution now sees inflation averaging 1.6% this 12 months and 1.7% in 2022. Additionally, the BoC acknowledged that ‘appreciable slack’ stays within the Canadian economic system and that ‘extraordinary help’ continues to be required. On a extra optimistic observe, the Financial institution of Canada is projecting stronger progress forecasts later within the 12 months regardless of a possible contraction in 1Q-2021 GDP. That is anticipated to correspond with an uptick in consumption as coronavirus restrictions ease begin to ease in February and enterprise confidence improves.
USD/CAD PRICE CHART: 15-MINUTE TIME FRAME (19 JAN TO 20 JAN 2021)
USD/CAD value motion at the moment trades decrease by greater than 100-pips intraday close to the 1.2635-mark. This roughly aligns with year-to-date lows, which Canadian Greenback bears may look to defend as a possible technical help stage. A detailed under this barrier may see USD/CAD draw back lengthen towards 2018 swing lows across the 1.2300-handle.
| Change in | Longs | Shorts | OI |
| Day by day | 3% | -6% | 0% |
| Weekly | 3% | 17% | 7% |
Merchants now await the post-BoC choice press convention led by Governor Macklem at 16:00 GMT. The pinnacle central banker has jawboned the Loonie just lately with feedback like “Canadian Greenback appreciation is hurting competitiveness of Canadian exports within the US market.” Doubling down on remarks like this might pose a headwind to the most recent stretch of Canadian Greenback energy and maybe allow USD/CAD value motion to claw again some draw back.
— Written by Wealthy Dvorak, Analyst for DailyFX.com
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