USDCAD – Still an Uptrend?

USDCAD – Still an Uptrend?

Ahead of tomorrow’s Bank of Canada meeting the loonie is well bid, supported by the general risk on sentiment and the better tone in oil. Does that mean that the rally in USD/CAD is done?

Perhaps not. Although the pair is well off yesterday’s highs at 1.3150 level it remains in a uptrend posting higher lows for now. Over the past month the economic data from Canada has been mixed with employment, Trade Balance and building permits all missing their forecasts. Although the market does not expect the BOC to move in rates, the central bank may take on a more dovish tone in its assessment of the economy and may leave the door open for possible rate cut in the near future.

If the BOC does change its posture, the loonie is sure to weaken with USDCAD possibly testing the 1.3100 figure once again as traders make adjustments for rate expectations. If on the other hand the BOC remains resolutely neutral, today strength is likely to continue with pair testing the 1.2800 support over the next few days.

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