After some strong volatility earlier in the week, USD/CAD has taken a pause on Thursday. In the North American session, the pair is trading at 1.3154, up 0.07% on the day.
Bank of Canada holds rates
There were no surprises from the Bank of Canada, which held its policy meeting on Wednesday. The BoC reiterated its commitment to maintain interest rates close to zero until the bank’s inflation of 2% is reached. As well, the bank said that it would continue to purchase government bonds at the current pace of C$5 billion per week and would continue its extraordinary monetary policy stimulus while the economy continues to recover. The rate statement noted that inflation was expected to stay well below the target in the near-term. On a positive note, the statement said that the US recovery was moving more quickly than expected and that it projected that Canada’s GDP in Q2 would be stronger than the bank had forecast in July.
The BoC’s accommodative policy was essentially a repeat of the July policy statement, although this time around, policymakers removed language that the bank was willing to extend further stimulus if needed. This tweak didn’t impress investors, as USD/CAD declined 0.70% on Wednesday.
All in all, the Bank of Canada didn’t have much to say at its policy meeting. Still, investors will dutifully listen to BoC Governor Tiff Macklem’s speech to the Canadian Chamber of Commerce later on Thursday (GMT 16:30). Macklem is expected to address the impact which Corvid-19 has had on the Canadian economy and a positive take on the economic recovery could give the Canadian currency a boost.
- We find resistance at 1.3222. This is followed by resistance at 1.3296
- 1.3107 is providing support, protecting the 1.31 level. Below, there is support at 1.3069
- The 20-day MA remains relevant and is touching the pair
- 1.3288 is the first line of resistance. This is followed by resistance at 1.3338
- 1.3137 is providing support. Below, there is support at 1.3021 which is protecting the symbolic 1.30 level
- USD/CAD broke above the 20-day MA on Tuesday, which points to an upward trend for the pair