Never miss a story from Peter Hanks

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Peter Hanks

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Bank of Canada Talking Points:

  • The Bank of Canada expectedly left its interest rate unchanged, but highlighted greater uncertainty in the rate path forward
  • USDCAD now looks to unemployment data from the US and Canada slated for release on Friday
  • Learn to trade news events like this one with our Trade the News Trading Guide

See how IG clients are positioned on the Dow, Crude oil and the US Dollar with our free IG Client Sentiment Data.

USDCAD is pressing higher after the Bank of Canada offered a dovish shift in language in their rate decision report. While the bank expectedly left its interest rate unchanged, dismal GDP numbers last week may have weighed on the bank’s outlook.

The rate decision report highlighted the recent slowdown experienced in the Canadian economy saying, “the fourth quarter slowdown was sharper, more broadly based than forecast.” Consequently, the bank found the economy in the first half of 2019 to be weaker than originally forecast. Together, the downward revisions worked to muddy the rate hike path and the bank noted the change saying there is “increased uncertainty about the timing of future rate increases.”

USDCAD Price Chart: 1-Minute Time Frame (March 6) (Chart 1)

USDCAD price chart

Given the greater uncertainty facing the bank, officials stressed data dependence moving forward. “Uncertainty about the pace of future rate hikes means the bank will be closely watching household spending, oil markets and global trade policy” officials said. The Canadian energy sector will continue to be a pivotal factor in Canadian rate hikes and the Canadian Dollar, as the bank highlighted the impact of cratering oil prices in their last rate decision.

USDCAD Price Chart: 4 – Hour Time Frame (January 2018 – March 2019) (Chart 2)

USDCAD price chart 4-hour

As for the broader outlook of USDCAD, the seemingly dovish tone helped to continue the move off support near 1.3122. After the report, the pair immediately traded higher to the 1.3440 range. Further, the greater uncertainty and data dependence highlighted by the Bank of Canada could provide a tailwind for the USD moving forward as the language is priced in to the market’s expectation of future rate hikes.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: CAD Technical Analysis Overview: USDCAD, EURCAD, CADJPY

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.