- USD/CAD added to the post-BoC strong positive move on Wednesday.
- Weaker oil prices undermined the loonie and remained supportive.
- A subdued USD price action did little to provide any additional boost.
The USD/CAD pair maintained its bid tone through the early European session on Thursday and is currently placed just below four-week tops set earlier, around mid-1.3100s.
The pair edged higher for the third consecutive session on Thursday and added to the previous session's strong intraday positive move of around 120 pips, triggered by dovish sounding monetary policy statement by the Bank of Canada (BoC).
The BoC, at the latest policy meeting on Wednesday, left its key benchmark interest rate unchanged at 1.75% but removed the reference to the current rate as “appropriate” and downgraded the GDP growth projection for 2020 to 1.6% from 1.8%.
The central bank also showed concerns about the recent weak data. This combined with the earlier release of softer Canadian consumer inflation figures for December exerted some heavy downward pressure on the Canadian dollar.
Adding to this, some follow-through weakness in crude oil prices, now down around 1.5% for the day, further undermined demand for the commodity-linked currency – the loonie – and remained supportive of the pair's ongoing positive movement.
Meanwhile, reviving safe-haven demand, amid concerns coronavirus outbreak in China, led to a modest pullback in the US Treasury bond yields, which kept the USD bulls on the defensive and turned out to be the only factor capping further gains.
It will now be interesting to see if the pair is able to capitalize on the momentum or bulls opt to take some profits off the table amid absent relevant market-moving economic releases on Thursday, either from the US or Canada.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds firm above 1.0700 ahead of German inflation data
EUR/USD trades on a firm footing above 1.0700 early Monday. The pair stays underpinned by a softer US Dollar, courtesy of the USD/JPY sell-off and a risk-friendly market environment. Germany's inflation data is next in focus.
USD/JPY recovers after testing 155.00 on likely Japanese intervention
USD/JPY is recovering ground after crashing to 155.00 on what seemed like a Japanese FX intervention. The Yen tumbled in early trades amid news that Japan's PM lost 3 key seats in the by-election. Holiday-thinned trading exaggerates the USD/JPY price action.
Gold price bulls move to the sidelines as focus shifts to the crucial FOMC policy meeting
Gold price (XAU/USD) struggles to capitalize on its modest gains registered over the past two trading days and edges lower on the first day of a new week, albeit the downside remains cushioned.
Ripple CTO shares take on ETHgate controversy, XRP holders await SEC opposition brief filing
Ripple loses all gains from the past seven days, trading at $0.50 early on Monday. XRP holders have their eyes peeled for the Securities and Exchange Commission filing of opposition brief to Ripple’s motion to strike expert testimony.
Week ahead: FOMC and jobs data in sight
May kicks off with the Federal Open Market Committee meeting and will be one to watch, scheduled to make the airwaves on Wednesday. It’s pretty much a sealed deal for a no-change decision at this week’s meeting.