By Mark Jensen
USD/CAD is rising for the 4th day – it reached May 21 high in the 1.0940 area.
Today we have the Bank of Canada’s meeting on the agenda. The central bank is expected to be neutral. For sure there will be no talk about easing as inflation is already at target, but at the same time there’s no need for the central bank to do tightening: GDP growth remains quite low. Still, as the BOC probably drops its “downside risks to inflation remain important” comment, there’s the risk of CAD getting a bit stronger. Support is at 1.0890, 1.0850 and 1.0815.
The pair has breached up the falling wedge and the rise above 1.0940 will represent an exit from rectangular formation. A close above this level will boost the greenback to 1.1010 (100-day MA) and probably to 1.1050 (April 23-25 highs), though the bearish Ichimoku Cloud represents an obstacle. In the current circumstances we’ll be looking for buying opportunities in case of the retreat to 1.0850.
Looking ahead data from the US may be more important for USD/CAD than what happens in Canada. So pay attention to American labor market data this week.
Chart. Daily USD/CAD