Forex News: Canadian Dollar Tumbles After BoC Rate Decision
The Bank of Canada had been employing somewhat of a hawkish stance in recent months, going so far as to note in their policy statements that a “withdrawal of stimulus” would soon be appropriate. However, at no point in time did it become clear when the BoC would raise its rates. Today, the timeline became much clearer.
Although the main rate was kept on hold at 1.00%, as expected, and where it has been since September 2010, Governor Mark Carney said that “the more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector suggest that the timing of any such withdrawal is less imminent than previously anticipated.”
USDCAD 1-minute Chart: January 23, 2013
Charts Created using Marketscope – Prepared by Christopher Vecchio
In the hour after the release, the USDCAD traded up from 0.9925 to as high as 1.0003, before pulling back to 0.9986, at the time this article was written. The news forced a bullish breakout from the descending trendline off of the November and December highs at 0.9925, confirmed with the move above 0.9970. A close above this level is necessary today to validate the breakout; 1.0050, 1.0130/40, and 1.0220/30 are levels to like higher towards.
--- Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail firstname.lastname@example.org
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.