News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
More View more
Real Time News
  • Japanese #Yen Forecast: $USDJPY Breakout Imminent- #FOMC Levels -
  • RT @BrendanFaganFx: 78 counterparties take $1.240 trillion at Fed's fixed-rate reverse repo $USD $DXY
  • here we go - starting right now
  • SEC Chair Gensler: - Working with Congress on crypto would help - A large number of crypto investors could be harmed
  • Pre-FOMC US Dollar Price Action Setups: EUR/USD, GBP/USD, USD/JPY
  • The big question is whether the Fed announces taper tomorrow or whether they punt that announcement to the November rate decision, waiting for employment data to improve to the point of ‘significant further progress. More market update from @JStanleyFX :
  • SEC Chair Gensler: - The market is in a better position to absorb global shocks - Securities rules give the SEC great power over crypto
  • feels like we haven't had one of these in quite a while Pre-FOMC Price Action Setups, starting right at 1pm, top of the hour 1. USD PA setups 2. Evergrande worries 3. Stonks - fly or die?
  • That all said, staying patient and not chasing is prudent here imo. Tomorrow will likely be better for assessing short-term directional bias (China markets open again following holiday, post-FOMC).
  • Also, S&P Global put out a report overnight that said China would likely step in to curb “far-reaching contagion” re: Evergrande. The House is scheduled to vote on a stopgap funding bill Tuesday, which might be alleviating some investor angst around the debt ceiling as well.
USD/CAD Rate Outlook Hinges on Bank of Canada (BoC) Forward Guidance

USD/CAD Rate Outlook Hinges on Bank of Canada (BoC) Forward Guidance

David Song, Strategist

Canadian Dollar Talking Points

USD/CAD consolidates ahead of the Bank of Canada (BoC) meeting as the central bank is anticipated to retain the current policy, but the exchange rate may continue to retrace the decline from the May high (1.3565) as a bull flag formation unfolds.

USD/CAD Rate Outlook Hinges on BoC Forward Guidance

USD/CADpulls back from the February high (1.3465) despite the limited reaction to Canada’s Gross Domestic Product (GDP), and little to no signs of a looming recession may keep the BoC on the sidelines as thecentral bank insists that “some of the slowdown in growth in late 2019 was related to special factors.”

Image of DailyFX economic calendar

In turn, the BoC is expected to keep the benchmark interest rate 1.75% in March, and Governor Stephen Poloz and Co. may continue to endorse a wait-and-see approach in 2020 as the central bank “forecasts real GDP will grow by 1.6 percent this year and 2 percent in 2021, following 1.6 percent growth in 2019.

More of the same from the BoC may generate a bullish reaction in the Canadian Dollar as market participants scale back bets for lower interest rates, and Governor Poloz may retain the status quo ahead of his departure in June as “the global economy is showing signs of stabilization.”

Image of BoC interest rate decisions

However, a material change in the forward guidance may fuel a further shift in USD/CAD behavior, and the exchange rate may continue to retrace the decline from the May high (1.3565) if the BoC shows a greater willingness to rollback the rate hikes from 2018.

With that said,the recent advance in USD/CAD may gather pace if the BoC prepares Canadian households and businesses for lower interest rates, and the exchange rate may continue to extend the advance from the 2020 low (1.2957) as a bull flag formation unfolds.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

USD/CAD Rate Daily Chart

Image of USD/CAD rate daily chart

Source: Trading View

  • Keep in mind, the near-term strength in USD/CAD emerged following the failed attempt to break/close belowthe Fibonacci overlap around 1.2950 (78.6% expansion) to 1.2980 (61.8% retracement), with the yearly opening range highlighting a similar dynamic as the exchange rate failed to test the 2019 low (1.2952) during the first full week of January.
  • There appears to be shift in USD/CAD behavior as the exchange rate breaks out of the range from the fourth quarter of 2019 and clears the October high (1.3383).
  • In turn, USD/CAD may continue to retrace the decline from the May high (1.3565) as the bull flag formation unfolds, but the bullish momentum appears to be abating as the Relative Strength Index (RSI) deviates with price and reverses course ahead of overbought territory.
  • Lack of momentum to close above the Fibonacci overlap around 1.3420 (78.6% retracement) to 1.3430 (61.8% expansion) has pushed USD/CAD back below the 1.3390 (50% expansion) region, with the exchange rate quickly approaching the former resistance zone around 1.3330 (38.2% retracement) to 1.3350 (38.2% expansion).
  • Next area of interest comes in around 1.3290 (61.8% expansion) to 1.3310 (50% retracement) followed by the Fibonacci overlap around 1.3220 (50% retracement) to 1.3250 (23.6% expansion).

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.