The Bank of Canada left the interest rate unchanged at 1% as unanimously expected and did not really alter the statement. Yet the no-change doesn’t mean no action.
USD/CAD traded in a choppy manner in a range of over 50 pips, but eventually settled at around 1.0760, basically unchanged from the hours before the publication.
On one hand, inflation has picked up, and this gave a boost to the C$ in recent weeks. However, the BOC seems unexcited from this change. It can shrug off the data as a one time event. Canada releases fresh inflation data on Friday, and this may push Stephen Poloz and his colleagues to respond, at least in wording.
Yet on the other hand, the recent employment data was quite disappointing, and this may be behind the push to maintain a relatively dovish stance.
Earlier in the day, Canadian manufacturing sales beat expectations with a rise of 1.6% against 1% expected for the month of May.
USD/CAD is supported at 1.0750, followed by 1.0710. Resistance awaits at 1.08. For more, see the Canadian dollar prediction.Get the 5 most predictable currency pairs