USD/CAD looks to close little changed around 1.2100 as BoC keeps status quo
- USD/CAD continues to fluctuate in a narrow weekly range.
- Bank of Canada left its monetary policy settings unchanged.
- US Dollar Index steadies above 90.00 ahead of CPI data.
After dropping to a daily low of 1.2056 earlier in the day, the USD/CAD pair erased the majority of its losses and was last seen trading virtually unchanged on the day at 1.2108.
BoC's policy announcements fail to trigger a reaction
Earlier in the day, the USD weakness amid slumping US Treasury bond yields forced USD/CAD to push lower. Additionally, the barrel of West Texas Intermediate (WTI) reached its highest level since October 2018 at $70.60 and helped the commodity-sensitive loonie outperform its rivals.
Meanwhile, the Bank of Canada (BoC) announced on Wednesday that it left its policy rate unchanged at 0.25% following its June meeting. Moreover, the BoC decided to maintain the target of C$3 billion in weekly net asset purchases of the government of Canada bonds unchanged.
In its policy statement, the BoC reiterated that it will hold the policy rate at the effective lower bound until economic slack is absorbed and the 2% inflation target is sustainably achieved. "In current projections, this does not happen until the second half of 2022," the publication further read.
On the other hand, the US Dollar Index (DXY), which dropped to a daily low of 89.83, started to edge higher as US Treasury bond yields managed to pull away from daily lows. Currently, the DXY is flat on the day at 90.14, not allowing USD/CAD to turn south.
On Thursday, the Consumer Price Index (CPI) data from the US will be looked upon for fresh impetus.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
