- USD/CAD sees further upside as BoC’s Macklem kept the door open for more interest rate cuts.
- Canada’s monthly manufacturing sales rose 2.1%, faster than expectations of 1.3%.
- The CAD pair remains firm, maintaining the breakout of the ascending triangle.
The USD/CAD pair refreshes a more than four-year high around 1.4240 on Friday. The CAD pair is performing strongly despite the US Dollar (USD) giving up intraday gains, suggesting strong weakness in the Canadian Dollar (CAD).
The CAD remains a loser as the Bank of Canada (BoC) maintains an aggressive policy easing stance. Price pressures have been controlled and labor demand is weak.
The BoC cut its interest rates by 50 basis points (bps) to 3.25% on Wednesday. This was the BoC’s second consecutive interest rate cut. BoC Governor Tiff Macklem guided a gradual cycle of policy easing as interest rates have dropped significantly. The central bank has reduced interest rates by 175 bps this year.
On the economic data front, October’s monthly manufacturing sales were better than expected. Sales in the manufacturing sector rose 2.1%, faster than estimates of 1.3%, after contracting 0.6% in September, which was revised down from 0.5%.
Meanwhile, the US Dollar Index (DXY), which tracks the value of the Dollar against six major currencies, falls after failing to hold above the key resistance of 107.00.
USD/CAD has shown a strong rally after a breakout of the ascending triangle formation on a weekly time frame, resulting in an expansion in volatility. The upward-sloping 20-week EMA near 1.3900 suggests that the near-term trend is bullish.
The 14-week Relative Strength Index (RSI) is trading in the bullish range of 60.00-80.00, suggesting strong upward momentum.
Going forward, a decisive break above the intraday high near 1.4240 would take the asset towards the round level resistance of 1.4300 and the March 31, 2020 high of 1.4350.
On the other hand, a move lower below the November 25 low of 1.3928 would drag the pair towards the round support level of 1.3900, followed by the November 8 low of 1.3860.
USD/CAD Weekly Chart
economic indicator
BOC interest rate decision
He Bank of Canada announces the interbank interest rate. This rate affects a range of interest rates set by commercial banks, building societies and other institutions for their own borrowers and depositors. It also affects exchange rates. If the Bank of Canada is firm on the economy’s inflationary outlook and raises rates, this is bullish for the Canadian dollar, while an outlook for reduced inflationary pressures will be bearish.
Last post:
Wed Dec 11, 2024 2:45 p.m.
Frequency:
Irregular
Current:
3.25%
Dear:
3.25%
Previous:
3.75%
Fountain:
Bank of Canada
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.
