10 Jul 2015
USD/CAD ready to test 2015 highs
FXStreet (Córdoba) - USD/CAD posted the third weekly gain in a row on the back of risk aversion and a decline in crude oil prices. The pair rose on Monday to 1.2785, reaching the highest level in three months and then stabilized after pulling back.
After Yellen and jobs, comes BoC
During the last few days it has remained steady, hovering between 1.2660 and 1.2740. Today’s Canadian employment report surpassed expectations and pushed the pair to test the lower bound of the range, but it failed to break it. Afterwards, Yellen’s words had little impact.
Next week, on Wednesday, the Bank of Canada (BoC) will announce its decision on monetary policy. The meeting is likely to impact the loonie across the board. Most analysts expect the rates to remain on hold but other are looking for a rate cut.
“We now expect that the Bank of Canada will cut its overnight rate to 0.50% next week. This is an out of consensus call and the market pricing is around a 50% of a 25bps cut”, said analyst from TD Securities. According to them, if the central bank believes that another cut is needed to achieve the inflation target it is preferential to move sooner rather than later, noting that in September the meeting does not have a Monetary Policy Report and will be in the middle of elections while October is too late.
Expectations about outcome of the meeting could trigger volatility. A bullish run in USD/CAD could send it toward 2015 highs that lie at 1.2830/40; above it would be trading at the strongest level since 2009.
After Yellen and jobs, comes BoC
During the last few days it has remained steady, hovering between 1.2660 and 1.2740. Today’s Canadian employment report surpassed expectations and pushed the pair to test the lower bound of the range, but it failed to break it. Afterwards, Yellen’s words had little impact.
Next week, on Wednesday, the Bank of Canada (BoC) will announce its decision on monetary policy. The meeting is likely to impact the loonie across the board. Most analysts expect the rates to remain on hold but other are looking for a rate cut.
“We now expect that the Bank of Canada will cut its overnight rate to 0.50% next week. This is an out of consensus call and the market pricing is around a 50% of a 25bps cut”, said analyst from TD Securities. According to them, if the central bank believes that another cut is needed to achieve the inflation target it is preferential to move sooner rather than later, noting that in September the meeting does not have a Monetary Policy Report and will be in the middle of elections while October is too late.
Expectations about outcome of the meeting could trigger volatility. A bullish run in USD/CAD could send it toward 2015 highs that lie at 1.2830/40; above it would be trading at the strongest level since 2009.