The USDCAD is in the middle of a choppy trading session as the Bank of Canada voted to leave the interest rates unchanged at 0.25%. This decision meets the market expectations, which did not foresee any further adjustment in interest rates.
Attention has now shifted to the Q2 2020 edition of the Monetary Policy Report. Here are excerpts:
“In Canada, the number of new COVID-19 cases has fallen sharply from its April high.”
“economic recovery has begun in all provinces and territories and across many sectors”.
“The Bank of Canada expects a sharp rebound in economic activity in the reopening phase of the recovery, followed by a more prolonged recuperation phase, which will be uneven across regions and sectors”.
“The economic outlook is extremely uncertain, largely because of the unpredictable course of the virus…the July Monetary Policy Report provides a central scenario for the economy rather than the usual economic projection”.
The lack of a projection from the Bank of Canada has left the Canadian Dollar in the cold. It will probably derive further direction from the crude oil price direction as dictated by the OPEC + meeting holding at the moment.
In the meantime, US Industrial Production registered at 5.4%. This is a vast improvement over the previous figure of 1.4% and also better than the market consensus of 4.3%.
Technical Outlook for the USDCAD
On the strength of the BoC decision and the US Industrial Production data, intraday trades may favour the USD. There is a noticeable lack of movement on crude oil prices at the moment. This has left the daily candle in a small bearish position, with price action now narrowing into a symmetrical triangle.
An upside break of the triangle targets 1.36961 at the first instance, with 1.37629 and 1.38513 constituting the next resistance targets.
On the flip side, a breakdown of the triangle targets the 1.34656 support initially, with 1.33487 and 1.32044 forming the next downside targets.