- The loonie remains among the best performing currencies.
- USD/CAD targets 1.2600, vols expected to remain elevated.
- Bank of Canada: the announcement is coming, which would be a rise of 50 basis points.
USD/CAD is trading at 1.2615/20, the lowest level since April 22 prior to US economic data and Bank of Canada decision. The loonie is one of the best performing currencies for these hours.
Eyes on BoC rates
The loonie has been rising at a good pace since last week’s close. USD/CAD first lost the 1.2760 support and this week the 1.2710 zone. It is now targeting 1.2600; below the next support is seen in the 1.2560 area. On the upside, at 1.2625 is the first resistance followed by 1.2670 (horizontal level and moving average of 20 in four hours).
The fall of the pair occurs in the prior to knowing the decision of the Bank of Canada. A rise of 50 basis points is expected. Some analysts even mention the possibility of a 75-point increase. The decision will come out at 14:00 GMT.
High volatility is expected, even more so considering the recent movements. The direction of the USD/CAD tour can be any, not only because of the decision and the tone of the statement, but they are events conducive to behaviors of the type “buy on the rumor, sell on the news”. Should the latter materialize, the loonie could weaken even with a rally in line with expectations.
Technical levels
Source: Fx Street
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