BoC Won't Rush to Raise Interest Rates

26 October, 2017

The Bank of Canada raised the key interest rate twice this year. At yesterday's meeting, the regulator left the monetary policy unchanged. The key interest rate remained at the same level of 1.00%. The central bank announced that they won’t rush to raise the interest rates in the nearest future. The regulator is going to assess the impact of higher interest rates on the economy of the country. These events triggered aggressive purchases of USD/CAD. The Canadian dollar weakened against the US dollar by more than 150 points.

Support for the US currency is provided by the positive statistics and growth of the US government securities yield. The U.S. 10-Year Bond Yield is at the 2.42-2.43% level now.

A series of optimistic reports on the US economy was published this week. The indices of business activity in the manufacturing and service sectors accelerated in October. The volume of orders for durable goods increased by 2.2% in September. It’s higher than the predicted 1.0% value. Sales of new real estate increased by 18.9% to 667.000. Experts expected the decline of the index by 0.9% to 555.000.

The probability of increasing the Fed key interest rate in December 2017 exceeds 95%.

Source: cmegroup.com

Let’s look at the current technical pattern on USD/CAD

  • Support levels: 1.27750, 1.27150, 1.26400
  • Resistance levels: 1,28150, 1.29000

The USD/CAD currency pair is consolidating in the 1.27750-1.28150 range at the moment. The technical pattern is ambiguous. At the same time, USD/CAD has the potential for the further growth. I recommend opening positions in the current trend direction. Buying USD/CAD with the use of a trailing stop makes sense after the price fixes above the 1.28150 local resistance. The asset may move to the 1.29000 round level. When tracking the position, we recommend using a trailing stop.

An alternative option. I don’t rule out a technical correction in the near future. If the pair fixes below the 1.27750 local support, it is advisable to open short positions. USD/CAD can move to 1.27300-1.27150.


Source   Presented by JustForex
Canadian dollar strengthened to a weekly high12 Feb, 2020  

The Canadian dollar strengthened to a one-week high against its American counterpart on Wednesday, as declining concern over the economic impact...

Loonie braces for Canadian jobs data10 Jan, 2020  

The latest employment figures out of Canada will be released at 13:30 GMT on Friday. Recent data have been disappointing, which puts extra...

CAD rises ahead of BoC rates decision4 Dec, 2019  

The Canadian dollar gained against the USD during the Asian session as the market waited for the BOC decision that will be made later today.


USD/CAD retreats from session highs,13 Aug, 2019  

US Dollar Index loses traction in the last hour. WTI clings to small daily gains near $55 handle. Coming up: Consumer Price Index (CPI) data...

USD/CAD rebounds from multi-month lows5 Jul, 2019  

A sharp pullback in Oil prices undermined Loonie and helped gain some positive traction. Fed rate cut bets kept the USD bulls on the defensive...

USD/CAD sticks to modest gains14 Jun, 2019  

A modest pull-back in Oil prices undermine Loonie and helped regain traction. The USD continues to attract some safe-haven flows and remained...


CAD boosted by jobs report10 Jun, 2019  

The Canadian dollar has continued to rally against its US counterpart, following on from Friday’s sold gains after a better than expected jobs report...

USD/CAD struggles to make a recovery6 Jun, 2019  

US Dollar Index stays calm above the 97 mark. WTI tries to retrace Wednesday's sharp drop. Coming up: Trade balance data...

CAD hitches a ride as crude prices surges23 Apr, 2019  

The Canadian dollar rose on the back of rising crude oil prices. WTI crude oil closed on Monday with 2.45% gains. This allowed the Canadian dollar...