- USD/CAD fails to hold onto recovery gains.
- WTI pullback, risk reset in Asia confronts increasing odds of the BOC’s rate cut.
- US data, coronavirus headlines will also be important to follow.
USD/CAD declines 0.17% to 1.3348 amid the initial trading hours on Wednesday. While increasing odds of the BOC’s rate cut, following the Fed’s shock announcement, favored the pair on Tuesday, the latest recovery in WTI and risk reset in Asia seem to have exerted downside pressure. The Loonie traders will pay close attention to today’s BOC meeting amid global drives to tame the side effects of the coronavirus (COVID-19).
While Canadian economics haven’t been impressive following upbeat comments from the BOC’s Poloz, the latest surprise 0.50% rate cut from the US Federal Reserve is likely the key driver to push investors towards expecting a rate cut after today’s BOC meeting.
“In Canada's case, markets have now fully priced in a rate cut for March, and with recent developments, we believe that the cost of disappointing the market would be unpalatably high for the BoC. Although their preference may be to wait until they have a full forecast in hand to act, we now believe that the BoC will cut rates by 25 bps at tomorrow's meeting,” said TD Securities in this regard.
Also favoring the pair’s pullback is oil’s recovery as well as the positive performance of Asian equities. By the time of writing, the WTI pierces $48.00 with more than 1.0% gains whereas stocks in Asia are also mostly positive. The US 10-year treasury yields seesaw near 0.984%, down three basis points following its earlier drop to the record low of 0.901%.
Other than the BOC, for which overall consensus is of no rate change, the US ISM Non-Manufacturing PMI as well as coronavirus (COVID-19) headlines will also be the keys to follow.
Technical Analysis
Sellers will wait for the pair’s sustained declines below 1.3315 to take aim at the ascending trend line since January 07, 2020, at 1.3260 now. Alternatively, 1.3380, 1.3400 and 1.3430 question the pair’s short-term advances.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.