USD/CAD – Canadian dollar subdued ahead of BOC rate decision

The Canadian dollar is trading sideways on Wednesday. Currently, USD/CAD is trading at 1.3106, up 0.04% on the day. On the release front, the Bank of Canada holds a policy meeting and will set the benchmark interest rate. There are on key events in the United States. On Thursday, the U.S releases durable goods orders and unemployment claims.

All eyes are on the Bank of Canada, which holds its policy meeting later on Wednesday. The BoC has raised rates twice this year, and a third hike would raise rates to 1.75%, which would be the highest level since October 2008. This meeting is the first since Canada signed on to a new trade agreement with Mexico and the United States, which should provide a boost to the economy and calm investor jitters. The Federal Reserve raised rates in September and is expected to do repeat in December, so a BoC rate hike will help keep the Canadian dollar attractive to investors.

The Canadian dollar has sagged in October, declining 1.4% in that time. Investor appetite for the Canadian dollar has dampened, as geopolitical tensions have escalated. These include the U.S-China trade war, the uproar over the killing of a Saudi journalist in Turkey, and concerns over Brexit and the Italian budget. As well, the drop in oil prices has weighed on the Canadian currency. Although the markets are expecting the BoC to raise rates later on Wednesday, a rate hike could give the Canadian dollar some momentum and provide a much-needed boost.

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USD/CAD Fundamentals

Wednesday (October 24)

  • 9:00 US HPI. Estimate 0.3%
  • 9:45 US Flash Manufacturing PMI. Estimate 55.5
  • 9:45 US Flash Services PMI. Estimate 54.1
  • 10:00 BoC Monetary Policy Report
  • 10:00 BoC Rate Statement
  • 10:00 BoC Overnight Rate. Estimate 1.75%
  • 10:00 US New Home Sales. Estimate 627K
  • 10:30 US Crude Oil Inventories. Estimate 3.6M
  • 11:15 BoC Press Conference
  • 13:00 US FOMC Member Raphael Bostic Speaks
  • 13:10 US FOMC Member Loretta Mester Speaks
  • 14:00 US Beige Book

*All release times are DST

*Key events are in bold

USD/CAD for Wednesday, October 24, 2018

USD/CAD, October 24 at 9:00 DST

Open: 1.3086 High: 1.3101 Low: 13069 Close: 1.3091

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2831 12970 1.3067 1.3198 1.3292 1.3387

USD/CAD ticked lower in the Asian session but has recovered in European trade

  • 1.3067 is providing support
  • 1.3198 is the next resistance line
  • Current range: 1.3067 to 1.3198

Further levels in both directions:

  • Below: 1.3067, 1.2970, 1.2831 and 1.2733
  • Above: 1.3198, 1.3292 and 1.3387

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.