The Canadian dollar continues to have an uneventful week. Currently, USD/CAD is trading at 1.2808, up 0.08% on the day. The Canadian currency has taken a breather, after registering strong gains of 1.59% last week.
Markets eye on Bank of Canada decision
All eyes are on the Bank of Canada policy meeting on Wednesday, which will be the BoC’s final meeting of the year. In the current global environment of ultra-low interest rates, it’s a safe bet that bank members will not be making any changes to the Overnight Rate, which has been pegged at 0.25% since March. The central bank is unlikely to trim rates any lower, with the economic recovery showing some traction. At the same time, the bank has indicated that it could be years before it hikes interest rates.
With little suspense over the rate decision, investors and traders will be focussed on the BoC rate statement. The tone of the statement could affect the Canadian dollar, as a positive message from policymakers will act as a vote of confidence in the economy and could boost the Canadian currency. Conversely, a pessimistic portrayal of economic conditions will likely weigh on USD/CAD. Canada’s economy has shown positive data, such as employment. However, the Canadian economy is very dependent on the United States; as the saying goes, when the US sneezes, Canada gets a cold. This means that in order for the Canadian economy to return to pre-pandemic levels, it will need the US economy to lead the way.
It has been a sleepy start to the week for USD/CAD, but traders should be prepared for more significant movement from the pair around the time of the BoC rate decision on Wednesday (13:30 GMT).
.
USD/CAD Technical
The daily support and resistance lines are as follows:
- USD/CAD faces weak resistance at 1.2832. Close by, there is resistance at 1.2862
- There is support at 1.2774, followed by a support line at 1.2746