USD/CAD steady as BoC holds the course on rates

After drifting in the early part of the week, USD/CAD has posted slight losses on Wednesday. Currently, the pair is trading quietly at 1.3576, down 0.28% on the day. On the fundamental front, the Bank of Canada maintained its Overnight Rate at 0.25%, where it has been pegged since March. Canada’s manufacturing sales rebounded after a disastrous April read of -28.5, with a 10.7% gain in May. There was good news south of the border as well. The US Empire State Manufacturing Index bounced back after four straight declines, with a strong reading of 17.2. Industrial Production gained 5.4%, outpacing the forecast of 4.5%. On Thursday, US retail sales are expected to post a gain of 5.0%.

Bank of Canada maintains benchmark rate

There were no surprises from the Bank of Canada, which kept interest rates at ultra-low levels. The rate remained at 0.25%, where it has been pegged since March, when the bank slashed rates by a staggering 1.0%, in order to stabilize the economy and financial markets. The bank did sound a somber note, stating that the global and Canadian economic outlooks remain uncertain. The Canadian dollar has reeled off three straight months of gains, but still hasn’t completely recovered from an abysmal March, when USD/CAD jumped 4.9 percent.

USD/CAD Fundamentals

• Wednesday (July 15)

• 8:30 Canada Manufacturing Sales. Estimate 9.2%. Actual 10.7%
• 8:30 US Empire State Manufacturing Index. Estimate 10.0. Actual 17.2
• 9:15 US Industrial Production. Estimate 4.5%. Actual 5.4%
• 10:00 Bank of Canada Rate Decision. Estimate 0.25%. Actual 0.25%
• 10:30 US Crude Inventories. Estimate -1.3M
• 11:00 BoC Press Conference

• Thursday (July 16)
• 8:30 Canada ADP Nonfarm Payrolls
• 8:30 US Core Retail Sales. Estimate 5.0%
• 8:30 US Retail Sales. Estimate 5.0%
• 8:30 US Unemployment Claims. Estimate 1250K

*Key events are in bold

USD/CAD Technical

In the Asian session, USD/CAD lost ground and this trend continued in European trade. The pair has reversed directions in North American trade, posting small gains

• 1.3643 is the next resistance line, followed by 1.3668
• 1.3572 is under pressure in support and could break in the North American session. Next, there is support at 1.3547
• The 10-day MA is just below the pair, at 1.3574. If USD/CAD breaks below this line, it is a bearish signal for the pair

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