You may want to know what’s happening with the USDCAD pair from the ongoing uncertainties surrounding NAFTA’s renegotiation. Stay informed from the BoC Rate Decision USDCAD Impact Analysis.
18 January, HotForex– The Bank of Canada (BOC) raised rates to 1.25 percent yesterday as expected, but said the uncertainty surrounding NAFTA negotiations is weighing over forecasts. Thus, USD/CAD saw two-way business before ending largely unchanged on the day.
BoC Rate Decision USDCAD Impact Analysis
USDCAD has settled today after a volatile bout yesterday, with the pairing having steady at near net unchanged levels near 1.2450 relative to levels that were prevailing just ahead of yesterday’s BoC rate hike. The 25 bp hike met expectations and was accompanied with cautious guidance that reaffirmed the central bank’s gradual normalization reflects ongoing uncertainties, notably the NAFTA renegotiation.
Another two more 25 bp rate hikes expected this year, in July and October. Focus will remain on the NAFTA front, with uncertainty about this having curtailed the Canadian dollar rallying amid the surge in oil prices. As a consequence of the retention of a cautious approach, loonie sloped lower to 1.2370.
Today, however, is seen returning back to mid 1.24s, back in the consolidation mode seen the last 3 days. The pair is seen closing at the mid 1.24s since Tuesday, while along with the long-legged Doji candle yesterday, suggests that uncertainty strongholds. Hence the next Daily candles will give a sign for the direction of the loonie from downwards.
Intra-day, significant is the fact that despite the large volatility seen yesterday, the pair manages to hold above 4 months low at 1.2350. This could be considered as a strong support level. Hence only a break below that could confirm a potential downwards movement for the USDCAD. In an even tighter timeframe, such as the Hourly chart, the instrument is seen bouncing between 50 and 200-period EMA, since overnight recovery.
The 50-period MA coincides with 20-period MA at 1.2440, which consider being a short-term support area. Meanwhile the 200-period EMA, at 1.2470, could be considered as the short term resistance level. Hence any break above this resistance area would suggest a retest of the 1.2530 –1.2550 area, while a break below the support area, could suggest a retest of the 1.2350 level.
Intra-day Momentum indicators remain down, with only Stochastic giving some signals of recovery. Daily Momentum indicators are low as well, however, they hold above-oversold territory since last week.
This article about BoC Rate Decision USDCAD Impact Analysis was written by Andria Pichidi, Market Analyst at HotForex. The provided article is a general marketing communication for information purposes only. It does not constitute an independent investment research. Nothing in this communication contains an investment advice or an investment recommendation. It also does not contain a solicitation for the purpose of buying or selling of any financial instrument.
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