The Bank of Canada (BoC) made the 50 bps cut that markets expected more or less yesterday. The CAD wobbled a bit but held around the mid/high 1.38 zone, notes Shaun Osborne, Chief FX Strategist at Scotiabank.
CAD stabilizes after BoC policy decision
“The message indicated that the easing process will continue while inflation risks are more balanced now. As such, the valuation of the terminal rate just below 3% by the middle of next year has changed little, helping to stabilize the CAD. Still, the door has not been closed on more 1/2 point cuts and the unusually wide policy gap over the Fed that extends to wide cash bond and swap spreads persists.
“The CAD has gained a bit more support during the overnight session, but prospects for a significant bounce are limited with rate differentials as wide as they are today. Spot’s slightly negative price reaction to yesterday’s small push above “The resistance at 1.3850 has caused a more neutral near-term tone in spot today.”
“USD/CAD remains deeply overbought in intraday and daily studies, which may slow USD’s near-term gains and could lead to a modest pullback (at least) in the recent uptrend. Support is at 1.3800/10, with a push below this level that could extend to test the support at 1.3750.”
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.
