USD/CAD rebounds sharply toward 1.2100 as the US dollar gains momentum
|- Loonie rises after BoC meeting but not versus the US dollar.
- US/CAD reverses from 1.2055 and climbs to 1.2100.
The USD/CAD rebounded at the 1.2055 area and rose toward 1.2100 amid a rally of the US dollar across the board, the day before key inflation data from the US. The loonie strengthened modestly after the Bank of Canada (BoC) meeting but not enough to break the 1.2050/55 area.
Between BoC and a stronger dollar
The BoC kept as expected interest rate unchanged at 0.25% and the tone of the statement contained no surprises. “The Bank did not provide any new hints about the direction of policy in its statement today but, with GDP likely to start growing strongly again this month as the coronavirus restrictions are lifted, we expect the Bank to cut the weekly pace of its asset purchases to $2bn at the next meeting in July”, explained analysts at Capital Economics.
The loonie printed fresh highs after the meeting. While it held onto gains versus currencies like AUD and NZD, it pulled back against the greenback. The US dollar erased losses across the board as US yields moved off lows. The 10-year rose from 1.47% to 1.49% during the last hour. Market participant await inflation data from the US due tomorrow.
From a technical perspective, USD/CAD found support again at the 1.2055 area that become a key support in the short-term. A break lower would pint to more weakness. On the upside, at 1.2105 the immediate resistance is seen, followed by 1.2115.
Techincal levels
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