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  • The USD/CAD pair trades near the six weeks high of 1.3370 during early Wednesday.
  • The USD strength and WTI weakness helped the pair.
  • BoC is likely the next big catalyst to watch.

USD/CAD is currently trading near fresh six week high of 1.3370 flashed during early Wednesday. Growing market support for the US Dollar (USD) and soft Crude prices, Canada’s main export item, continued fueling the quote upwards. The pair traders may now concentrate on monetary policy meeting by the Bank of Canada (BoC) in order to determine near-term trade direction.

The US Dollar (USD) has been on an upswing recently as traders seek solace in the greenback amid positive developments on the US-China trade discussions, uncertainty over Brexit and pessimism surrounding rest of the major economies.

Canadian Dollar (CAD), on the other hand, couldn’t ignore WTI’s decline to $55.75 after the 7.29M figure of weekly API crude oil stock versus -4.20M prior week contraction.

Looking forward, traders may now observe results from the BoC’s monetary policy meeting to roll out at 15:00 GMT. The Canadian central bank isn’t expected to alter overnight rate from 1.75% but the rate statement could please CAD sellers as the latest Canadian data haven’t been in favor of the Loonie.

Analysts at the Rabobank say,  

Although a more dovish tone than January can be expected, the BoC isn’t likely to discuss easing and the door will be left open for further rate hikes and a move towards ‘neutral’. We do not expect any further rate increases this cycle and expect the BoC to cut rates 25bp in 2020 Q2. This call is partly reliant on Rabo’s forecast for no further Fed hikes this cycle. We remain particularly concerned about the outlook for household consumption but we also expect business investment and trade to remain lackluster.

It should also be noted that monthly reading of the US ADP employment change and updates from the trade negotiations between the US and China could also offer intermediate moves to the USD/CAD pair. The ADP employment change is expected to weaken to 189K in February from 213K prior.

USD/CAD Technical Analysis

The pair needs to overcome a late-January high of 1.3380 to aim for 1.3420 and 1.3445.

Meanwhile, 1.3320 and 50-day simple moving average (SMA) figure of 1.3285 can limit the quote’s short-term downside.