The USDCAD will be in focus when the Bank of Canada (BoC) releases a tripod of market-moving data: its monetary policy report, interest rate decision and rate statement. Data will be published at 2 p.m. GMT.
This month’s meeting is the first that Tiff Macklem will preside over as the new BoC Governor. While the BoC is expected to keep rates steady at 0.25%, its quarterly Monetary Policy Report may be a big deal for tomorrow.
Canada has had a slew of mixed economic data. On the one hand, the employment conditions are improving. Still, on the other, the GDP fell 11.6% in the 1st quarter as a result of the economic impact of the coronavirus pandemic and falling crude oil prices. Despite a two-month rise in oil prices, there has not been much progress beyond the $40 mark, and crude is nowhere near its pre-coronavirus price levels. Rising coronavirus cases in the US could trigger a flight towards safety, which is negative for the commodity-linked CAD.
One of the talking points will be on what the BoC will do to support the local bonds market in terms of putting caps on long-term yields. This could make a difference in things like the housing market and mortgage rates.
Outlook for the USDCAD
The USDCAD is presently trading in a range that has the 1.36961 resistance as the ceiling, and 1.34656 as the floor. A dovish BoC could allow the USDCAD to test this upper border, with a breakout enabling the pair to target the 1.37629 resistance. 1.38605 is also an upside target of interest.
On the flip side, a hawkish BoC could allow the pair to challenge the range’s floor, with the possibility of attaining 1.33487 if the floor is taken out. 1.32044 is a support target which may be attainable with some support from OPEC + meeting news which props up crude oil prices. The OPEC + meeting scheduled for tomorrow could have an external impact on this pair, and traders need to be aware of this as well.