- Loonie shows weakness ahead of tomorrow’s Bank of Canada meeting.
- Greenback rises sharply across the board, but the yen is the best performer.
The USD/CAD pair kept rising and printed at 1.3436, a fresh 3-week high. Near the end of the American session, it remains near the lows with the Loonie consolidating losses across the board.
USD/CAD up, oil up, Wall Street up
A stronger US dollar boosted the USD/CAD. The US Dollar Index is up 0.40%, near the 2019 high, holding a bullish tone. The greenback is also up versus high yielding currencies despite the positive tone around equities in Wall Street. The DOW JONES is up by 0.57% near all-time-highs while the S&P 500 gains 0.85% on its way to a record close.
Not even higher crude oil prices capped the upside in USD/CAD. The WTI barrel holds at $66.20, up 1% for the day, around multi-month highs. The Loonie is among the weakest currencies considering majors while the yen is the top performer.
Ahead of BoC and US GDP
On Wednesday, the Bank of Canada will have its monetary policy meeting. No change in rates is expected (1.75%). According to analysts at ING the central bank is likely to keep to its dovish. “The downbeat outlook for both the domestic and global economy, as well as some slightly lower inflation figures, may even push policymakers towards a more cautious attitude when it comes to further rate hikes”. They consider that a rate hike in 2019 looks increasingly unlikely. The change in BoC expectation has been the main driver of the recent weakness seen in the Loonie.
The key report in the US will come out on Friday: Q1 GDP growth. “Nowcast estimates suggest Q1 GDP growth might exceed 2%, despite a number of uncertainties at the beginning of the year. We forecast GDP growth to print 2.3% in Q1“, wrote TDS analysts.
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