Top Story

Bank of Canada Leaves Rates Unchanged, Lowers Guidance

The Bank of Canada (BOC) today left overnight interest rates unchanged at 1.75%, as expected.  However, the market was more concerned as to if the BOC was planning on changing their guidance.  Although they said policy was appropriate and made no mention of any kind of future cuts, they lowered their 2020 growth outlook to 1.7% from 1.9% and their 2021 growth outlook to 1.8% from 2.0%.  The BOC cited weaker global growth, foreign demand and lower government spending as reasons for lowering their growth outlook.  Note that Canada is still one of the few major powers that have not begun easing policy, even as the Fed continued cutting rates today by 25bps, to 1.75%.

Upon release of the BOC interest rate decision and the policy statement, USD/CAD shot up 100 pips  from 1.3085 up to 1.3185, as seen on a 15-minute chart.  The pair then consolidated until the release of the FOMC decision, and upon it’s release, moved as high as 1.3207. 

Source: Tradingview, FOREX.com

On a daily chart, USD/CAD traded higher, back into the long-term triangle and out of the descending wedge pattern.  Between yesterday and today, the pair has retraced 50% of its move from the highs on October 10th to the lows yesterday.  There is also horizontal resistance at the 50% retracement level, near 1.3200.  Above there, resistance comes in at the 61.8% retracement level of 1.3230. 

Source: Tradingview, FOREX.com

On a 240-minute chart, there is room for USD/CAD to drop 100 pips back to 1.3100 before hitting support.  If price closes near current prices, it will form a shooting star candle, an indication prices may reverse.  Also note that RSI as moved into overbought conditions, another sign the pair my pullback.  Below there, support comes across at yesterday’s lows of 1.3042.  We can also see support on the daily at the lows from July 19th at 1.3016 and the psychological support at 1.3000.

Source: Tradingview, FOREX.com

It seems as if both the BOC and the FED are on a “data dependent” mode towards policy.  Continue to watch for comments from both bank committees.   Also, keep an eye on the USMCA.  If the agreement gets ratified, that should be a positive for the Canadian Dollar. 


Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

OPEN AN ACCOUNT