USD/CAD jumps after BoC holds rates

USD/CAD has recorded sharp gains on Wednesday. In the North American session, the pair is trading at 1.3224, up 1.07% on the day. The pair is currently at its highest level since October 8. In the US, today’s releases are limited to tier-2 events.

Bank of Canada holds interest rates at 0.25%

There were no surprises from the Bank of Canada, which maintained the Overnight Rate at 0.25 per cent for a seventh straight month. The BoC is also continuing its C$5 billion in government bonds weekly under its QE program. The bank slashed rates back in March to just 0.25%, when the Covid-19 pandemic spread and paralyzed large swathes of Canada’s economy. Covid-19 has again resurfaced in a second wave in October, but despite this setback, the economy is recovering faster than expected. Inflation is heading higher and the employment releases have been stronger than expected. The bank’s economic forecast stated that Canada’s economy will grow close to four per cent in 2021, after a decline of 5.5% in 2020.

The BoC has pledged to keep interest rates near zero until the economy gains strength and inflation reaches the bank’s two per cent target. This is a similar stance to that of the Federal Reserve, and similar to the situation in the US, this goal could take years. That means that we could remain in an ultra-low rate environment for years to come in both the US and Canada.

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USD/CAD Technical

  • There is resistance at 1.3314, followed by a resistance line at 1.3405
  • 1.3245 is providing support. Below, there is support at 1.3149
  • The pair has punched above the 20-day MA line, which is a sign of an upward trend

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

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.
Kenny Fisher

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