- The Canadian dollar accelerates its rise against the US dollar.
- Stocks rise sharply on Wall Street, oil gains more than 3%.
- Key event ahead: Bank of Canada meeting on Wednesday.
The combination of a rebound in crude oil prices, positive market sentiment and a weaker US dollar are putting pressure on the USD / CAD drastically down, the day before the Bank of Canada meeting. The pair is trading near 1.2630, its lowest level since Nov. 25.
The pair is falling for the second day in a row and dipped below the 20-day moving average for the first time in a month. It’s down over a hundred pips so far this Tuesday, having the worst day in weeks.
Stronger CAD before BoC
The loonie is among the best performers of the US session, supported by many factors, including crude oil prices. The WTI barrel is up 4.55% to $ 72.65. At the same time, the Dow Jones was up 1.50% and the Nasdaq 2.83%.
Despite falling against the Canadian dollar, the dollar rose against the Swiss franc, the euro, the British pound and the yen, supported by rising US yields, ahead of next week’s FOMC meeting. The key economic data this week will be Friday with US inflation figures.
In Canada, on Wednesday, the Bank of Canada will announce its decision on monetary policy. Changes in interest rates are not expected. Analysts at TD Securities anticipate a relatively quiet meeting, with limited scope for a significant change in tone. “The BoC will maintain that the outlook is evolving as expected and that the force of inflation is largely transitory (…) A quiet meeting of the BoC transfers the drivers of the CAD to the world at large. In turn, the uncertainty of covid, increased risk aversion and a context of mobility and relatively poor local growth should keep the USD / CAD around 1.28 for a little longer. “