- USD/CAD remains on the back foot near the lowest in 11 weeks.
- BOC’s Stephen Poloz shows readiness to use available tools if the further monetary stimulus is required to meet inflation targets.
- WTI strength, risk-on sentiment favored Loonie to gain 1.53% versus the greenback the previous day.
- US-China, virus headlines will be in focus amid a light calendar.
USD/CAD drops to 1.3770 after BOC Governor Stephen testified on early Wednesday morning in Asia. The BOC policymaker says that that bank is prepared to augment the scale of any of its programs if needed to support market functioning.
BOC stays ready to act if needed…
In his testimony before the Senate Committee on National Finance, the BOC Governor said there is considerable uncertainty about the future course of the coronavirus pandemic.
The central banker also reiterated the bank’s readiness to announce a rate cut while saying Lowering our policy rate to the effective lower bound is the best contribution we can make at this time to complement the government’s fiscal efforts.
Read more: BoC Gov. Poloz: Bank has tools available to deliver that stimulus
Risks remain light amid hopes of virus cure, economic restart…
The return of the full markets on Tuesday was welcomed by the optimism surrounding the gradual restart of global economies. The upbeat mood also gained strength from the Novavax being the 12th to try finding the cure of the coronavirus (COVID-19). Further to propel the sentiment was US President Donald Trump’s measures response over China’s Hong Kong Security bill.
Amid all these catalysts, US 10-year Treasury yields gained over three basis points (bps) to near 0.70% whereas S&P 500 crossed 3,000 for the first time since March by the end of Tuesday’s US session.
It’s worth mentioning that the price increase of oil, Canada’s main export, to $34.90, the highest since March 11, exerted additional burden on Loonie pair.
Looking forward, a lack of major data might hinder the pair’s moves but any more harsh comments from the US could negatively affect the Loonie strength and activate the pair’s pullback from the multi-day low.
Technical analysis
Considering the pair’s break below April 13 low of 1.3856, the quote is inching closer to 1.3710 support confluence comprising 100-day SMA and an ascending trend line stretched from January 07. Though, any further declines might not refrain from recalling sub-1.3600 area. Alternatively, a 50-day EMA level of 1.3940 can check the quote’s pullback beyond April 13 bottom.
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