The USDCAD price is relatively calm today as traders wait for the outcome of the ongoing Bank of Canada (BOC) interest rate decision. The pair is trading at 1.3186, which is slightly higher than yesterday’s low of 1.3142.
Bank of Canada preview
The Bank of Canada will release its interest rate decision at 14:00 GMT. It will be followed by a press conference by Tiff Macklem at 15:00 GMT. With interest rates at historic low levels, analysts predict that the bank will leave them unchanged. Also, most of those polled by Reuters expect the bank will make the case of low rates for longer. Also, they also expect the bank to say that it expects to continue buying assets for a longer period.
The central bank has left interest rates at 0.25% in the past few months and initiated a large quantitative easing program. Indeed, it is buying government bonds worth $3.8 billion every week. These measures have helped the country emerge from the pandemic faster than other countries, including the United States. This has seen the USDCAD pair drop by more than 8% in the past few months.
Still, there are significant risks for the Canadian economy. First, the price of crude oil has been tumbling as investors worry about low demand and higher supplies. As of this writing, Brent and West Texas Intermediate are down by more than 2%. Second, the number of Covid cases in the country has been rising. Yesterday, the country recorded more than 4,000 cases, bringing the total to more than 223k.
Third, the United States, its biggest trading partner, is also seeing a rapid increase in cases. Finally, cracks are emerging in the country’s real estate market. In the past two weeks, Moody’s, Fitch, and UBS have warned that house prices will decline.
USDCAD technical outlook
On the hourly chart below, we see that the USDCAD price has been moving sideways recently. At the current price of 1.3186, it is a few pips above the 15-day and 50-day exponential moving averages. It has also found strong resistance at the first resistance of the standard pivot point while its volatility has cooled.
Therefore, the outlook for the pair is neutral. However, the key levels to watch before and after the BOC rate decision are the pivot point at 1.3140 and October’s high of 1.3225.
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USDCAD technical chart
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