- USD/CAD trades 0.19% higher as despite oil trading just above flat.
- The BoC acknowledged the improving data and CAD appreciated yesterday.
Fundamental backdrop
The Bank of Canada left rates unchanged at 0.25% on Wednesday. One of the main points of the central bank meeting was stronger than expected Canadian data. The central bank confirmed they would continue the pace of their currency QE program buying CAD 5 billion worth of bonds per week. The bank stated the economic outlook in Canada and abroad is generally evolving as expected with activity picking up as economies re-open. Although, early recoveries in Canada and the US have been firmer than expected.
With the relatively strong CAD the bank does not expect inflation to be above the 2% target but there was no immediate mention of more stimulus. Overall the BoC are in wait and see mode and just today BoC’s Macklem said “the bank stands ready to adjust short-term liquidity facilities as market conditions warrant.”.
USD/CAD 1-hour chart
Looking at the chart below, the price has now bounced off the support zone at 1.3140 following the BoC event. As the oil price didn’t manage to sustain yesterday’s recovery this also helped the greenback with pushing higher. The next resistance in focus is the blue line just above 1.32. If this gets taken out then the wave high at 1.3259 could be under threat and a new higher low higher high would be made.
The indicators are looking more positive now too. The Relative Strength Index has now picked up from the floor and the MACD histogram is green. The signal lines look like they could cross the mid-point and complete the bullish signals.
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Additional levels
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