BoC Raises Interest Rates to 1.00 Percent, Ivey PMI Tops Expectations
The Bank of Canada continued to withdraw monetary stimulus measures by raising rates for the third successive month as policy makers believe that the economy will return to full growth by the end of next year. Meanwhile, Canada becomes the latest member to adopt the “unusual” uncertainty language as the global recovery is uneven.
The Ivey purchasing managers index for the month of August rose to the highest level since June 2008 as figures jumped to 65.9 from 54.00 in July. The only concern from the report was the decline in employment from 52.0 to 51.6. However, the massive increase in prices may keep the central bank on alert. All in all, the report bodes well for Canada, and will likely help fuel CAD strength along with the central bank rate hike during the U.S. trade.
USDCAD Daily Chart
Charts created Using Intellicahrts – Prepared by Michael Wright
The USDCAD has pared yesterday’s advance but remains bounded by the 38.2 percent and the 61.8 percent Fibonacci retracements on the April 27th to May 25th upswing. As these retracement levels have held up quite substantially during the past couple of months, I do not rule out further downside risks if the pair dips below 1.0350 as our speculative sentiment index stands at 1.36 and signals for further losses.
EURCAD Daily Chart
Charts Created Using Intellicharts – Prepared by Michael Wright
The EURCAD has extended its three day decline and now looks poised to test the 100-day moving average. Indeed, the 20-day SMA has crossed over below the 50-day SMA, which is indicative of additional losses. If the pair does manage to crossover below 1.3150, this may lead to further downside risks towards 1.300.
Written by Michael Wright, Currency Analyst
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.