The Canadian dollar (CAD) is holding near Tuesday’s closing level ahead of the Bank of Canada’s policy decision. The Bank is widely expected to cut its overnight interest rate by 25 basis points to 4.25%. This is a policy statement meeting (9.45ET)/press conference (10.30ET), with the next MPR update expected on October 23, notes Shaun Osborne, Chief FX Strategist at Scotiabank.
A push above 1.3575 will boost the USD further
“The easing cycle is likely to still have a long way to go, so policymakers are likely to sound dovish. Markets are pricing in sequential BoC cuts over the remainder of the year, so dovishness may help maintain the CAD’s corrective tone after its recent bounce, but is unlikely to push it significantly lower. Assuming no surprises today, attention can quickly turn back to the USD and the Fed’s outlook.”
“The estimated fair value for USD/CAD stands at 1.3616 today, suggesting modest upside risk for the USD, all else equal. Governor Macklem has a busy September ahead of him. Speeches are scheduled for September 10, 20, and 24. USD corrective gains have stalled roughly where I expected, at least for now. Intraday price action is neutral and tilted bearish for the USD at this point, with spot gains finding a bit more resistance in the mid/upper 1.35 area.”
“However, short-term momentum remains with the USD, and today’s (non-technical) factors suggest that upside risks remain for spot. A push above the 1.3575 resistance allows the USD to appreciate further to 1.3635 (38.2% retracement of the USD’s August decline) and potentially towards the mid/upper 1.36 zone. Support is at 1.3515/20.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
