USD/CAD is on a rising trend so far this week and hit fresh four-day highs at 1.3155 in Asia before reversing sharply to the 10-DMA support near 1.3130 region, where it now wavers. The latest leg down in the major can be attributed to a fresh round of selling seen in the US dollar versus its major rivals, as the USD bulls take breather heading into the European session. Moreover, a bout of profit-taking in the Canadian dollar cannot be ruled out after the overnight sell-off, as markets resort to repositioning ahead of the key Bank of Canada (BOC) interest rate decision due to be announced at 1400 GMT.
USDCAD Continues to Range
The BOC is widely expected to deliver a 25bps rate hike, with some analysts commenting, “The Bank should reiterate that hikes will be gradual and guided by incoming data, but we do not expect additional forward guidance. Though GDP and CPI forecasts should be stable, FX focus will be on the Bank’s messaging over prospective risks to the outlook, including trade. Note here the Bank will be incorporating tariffs already announced into its projection.” Earlier today, the spot staged a solid comeback amid broad-based US dollar strength and a sharp drop in oil prices, after the US threatened to slap another round of additional tariffs on USD 200 billion tariffs worth of the Chinese imports.
Meanwhile Crude Oil prices recovered as US secretary of state Mike Pompeo mentioned that “The United States may consider granting relief to some countries from economic sanctions that will be imposed on Iran’s oil exports in November” which helped Crude Oil linked currency Loonie to gain bullish momentum. With both sides of pair gaining positive influence ahead of Key macro data update, the pair moves in a range bound pattern. On the release front yesterday, Canadian construction data beat expectations. Housing Starts jumped 248 thousand, crushing the estimate of 195 thousand. This marked the highest gain since November. Building Permits followed the same trend, climbing 4.7%, compared to the estimate of 0.1%. This was the strongest gain in four months. Today’s calendar remains silent in Canada except for BOC interest rate decision while US markets will see release of PPI data & Crude Oil Inventories data.
This article was originally posted on FX Empire
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