- Incoming BoC Governor Tiff Macklem mentions negative rates and the CAD drops across the board.
- The USD/CAD jumps to session highs at 1.4100 aiming to end the week unchanged.
- BoC’s Macklem discards a snap back to normal after the COVID-19 crisis.
The Canadian dollar has taken a hit after the incoming Governor of the Bank of Canada, Tiff Macklem, suggested that the possibility of negative interest rates is on the table. The USD/CAD has bounced up from 1.4008 area to reach fresh five-day highs right above 1.4100 so far.
BoC’s new Governor Macklem warns about the COVID-19 crisis
Tiff Macklem, who will replace Governor Poloz in the Bank of Canada on June the 2nd, has been rather pessimistic about the economic impact of the coronavirus. In a press conference held on Friday, Macklem has warned that there will not be a snap back to normal after the pandemic-induced crisis.
Regarding the Bank’s monetary policy, the next BoC Governor observes the disruptive impact of negative interest rates and affirms that he feels “comfortable with lower bound of rates at 0.25%.” Furthermore, he has guaranteed the Bank’s commitment to providing essential liquidity to the system, in order to keep credit flowing.”
USD/CAD on track to close the week unchanged
The USD/CAD has gone through a v-shaped recovery this week, dropping from 1.4095 to find support at 1.3850 and bounce back again over the last two days, to reach 1.4100 again on Friday. On the way up, the pair should confirm above 1.4075/80 (April 28 high/Intraday high) then 1.4120 (April 24 high) and then 23 April high at 1.4200.
On the downside, below the 200-hour SMA the pair would lose momentum and might seek support at 1.4009 (intraday low) and then 1.3960 (April 29 high)