USD/CAD: Bank of Canada's impact
By Mark Jensen
USD/CAD declined from the high of 1.0960 on June 5. The pair’s continuing the slide from May high at 1.1278, although we’ve seen some stabilization in the 1.0815/20 area.
The negative factors for the pair were lower US yields and higher inflation in Canada. However, US yields have started recovering and the Bank of Canada said in June that an increase in inflation to its target level of 2% may be temporary and that there are still downside risks to inflation. Such approach of BOC will make negative impact on CAD.
The BOC Governor Stephen Poloz is due to speak at 15:15 GMT following the release of the central bank’s Financial System Review. Canadian trade balance is in the state of deficit and the unemployment rate increased last month. If Poloz once again emphasizes downside risks to economy, USD/CAD may rise in the short term.
Resistance lies at 1.0900 and 1.0950. Support is at 1.0835 and 1.0815.
Chart. H4 USD/CAD