- BoC left its policy rate unchanged at 0.25% as expected.
- WTI recovers modestly from daily lows, trades around $20.
- US Dollar Index retraces majority of daily rally.
The USD/CAD pair rose to a fresh weekly high of 1.4132 on Tuesday as falling crude oil prices and the Bank of Canada’s (BoC) dovish stance weighed on the CAD. However, with the greenback losing its bullish momentum in the last couple of hours, the pair retreated from its highs and was last seen trading at 1.4067, still adding 1.35% on a daily basis.
BoC introduces new asset purchase programs
As expected, the BoC kept its policy rate unchanged at 0.25%. However, the bank announced that it has launched a new provincial bond purchase program and a new corporate bond purchase program to continue to support the economy.
Commenting on the BoC decisions, “the real focus was on asset purchases and the Bank did not disappoint,” said analysts at National Bank of Canada. “As we’ve seen with the US Fed, the BoC has dramatically expanded its reach when it comes to asset purchases. Extra buying of GoC bonds and bills will help absorb the extraordinary amount of financing Ottawa needs to carry out its fiscal relief package.”
Meanwhile, after the weekly report published by the US Energy Information Administration (EIA) revealed that Crude Oil Stocks increased by 19.2 million barrels, the WTI extended its losses to $19.40 and put additional weight on loonie’s shoulders. As of writing, the WTI was down 2.4% on the day at $20.15.
Meanwhile, the disappointing macroeconomic data releases from the US allowed the USD to capitalize on risk-off flows and helped the US Dollar Index (DXY) rally toward the critical 100 mark. However, the DXY staged a technical correction and was last seen adding 0.55% on the day at 99.40.
Retail Sales and Industrial Production in the US declined by 8.7% and 5.4%, respectively, on a monthly basis in March.
Technical levels to watch for
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