The USDCAD got a big boost yesterday from the BOC rate announcement and statement and the pair has been able to piggy back on that move and move towards the 1.2800 region and beyond as of this writing. The highs of the range have now come into focus and it is only going to be a matter of time before the prices challenge the highs and then we could probably see a breakout in the pair depending on the strength of the dollar.
The pair has been caught in a tight range of around 200 pips for several weeks now and it should bring a lot of cheer to the bulls if the pair manages to break the range. The impetus for the same came from the BOC as it chose to hold rates. The BOC is known to be hawkish and hence a part of the market was even expecting a rate hike. There was a larger part of the market that was expecting them to be bullish in their statement atleast but neither of these happened.
USDCAD Gets a Boost
The BOC chose to hold the rates and also there was no hawkishness in the accompanying statement as far as the timeline for the future rate hikes. There was only caution in the statement which led the markets to believe that the next rate hike could be quite a few months away from now. This has led to the market beginning to sell of the CAD and the CAD fell against the dollar. We also saw the oil prices begin to weaken yesterday and this only added to the pressure on the CAD.
The pair now trades below the 1.2850 and as long as the dollar strengthens we should see the pair challenging the highs of the range pretty soon. Looking ahead to the rest of the day, there is no major economic news from the US or Canada for the day and so we should see the pair continue its bullish trend.
This article was originally posted on FX Empire
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