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  • The BoC is expected to hold considering the  last six weeks of solid economic data.
  • The price trades below the 200-day moving average and the resistance in the 1.33 handle.

USD/CAD has started out in early Asia between a low of 1.3314 and 1.3325 ahead of what is about to be a busy time for USD/CAD traders with the Bank of Canada around the corner. We received the  stronger-than-expected Q2 increase in Gross Domestic Produce on Friday which might be a reason for the BoC to hold, however,  the background detail within  the report was less encouraging than the headline.

“¢  GDP  increased 3.7% (annualized) in Q2.
“¢ Business investment declined, household spending growth was soft.
“¢  Industry  GDP  details were better with solid growth in ‘non-commodity’ industries.

BoC expectations

The BoC is expected to hold considering the  last six weeks of solid economic data, although the  further escalations in US-China trade tensions have left some market participants looking for a rate cut.  Markets are pricing in a full cut by December, with appreciable odds of a move in October – However, the BoC has been known to surprise.

“We expect the Bank to downplay recent economic strength in the face of worsening global trade tensions. Concerns over US-China relations should also be reflected in the forward looking language, where we expect subtle dovish tweaks,” analysts at TD Securities explained.

USD/CAD levels

The price trades below the 200-day moving average and the resistance in the 1.33 handle and a confluence of the 23.6% Fibo where. If price resumes back to the 38.2% on a break of the 20/50-DMA, (1.3240/60), then bears will be targetting the 1.28 handle – 1.3350 is the  near-term target to break still on the upside which guards the 1.34 handle and mid-June highs.