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USD/CAD parity challenged on a softer rate statement

The Bank of Canada did it again: the fresh rate decision contained a rather dovish rate statement, pushing back a potential rate hike farther into the future. USD/CAD made a leap to parity, but this line wasn’t conquered yet. Does the pair have enough momentum to make the break?USD CAD Parity January 23 2013

As expected, the BOC left the rate unchanged at 1%. When will the rate move higher? Not so soon. According to the statement, “Higher rates are ‘less imminent than previously anticipated”.

Before Mark Carney leaves his post as governor of the BOC and crosses the Atlantic to the UK, he makes moves that are less hawkish than his image so far.

One of the growing concerns in Canada is housing: prices of homes are dropping, in what some see as the “burst of a bubble”. In such an environment, rate hikes are certainly less than imminent.

USD/CAD was capped under the 0.9950 line towards the publication, and made a break higher. It peaked at 1.0004 before retreating under the parity line. 0.9950 now works as support, and 1.0066 is the next level if the break is eventually confirmed.

For more, see the Dollar/CAD forecast.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.