Canadian Dollar Price: USD/CAD Primed for Range Breakout - BoC and CPI Ahead
Canadian Dollar (CAD) Price, Chart and Analysis
- USD/CAD price stuck as important releases near.
- Bank of Canada’s hawkish stance may change.
USD/CAD Price Watching the Bank of Canada Closely
A busy day for Canadian dollar traders with the Bank of Canada (BoC) rate decision and the latest look at domestic price pressures both released this afternoon. BoC governor Stephen Poloz will also give his latest update on the state of the Canadian economy later. For all market moving data releases and events, see the DailyFX calendar.
The BoC is expected to leave interest rates unchanged at 1.75% today, for the 10th consecutive meeting. Governor Poloz remains on the hawkish-side as Canadian inflation remains above the 2% target and shows little signs of moving lower. However recent data has shown patches of weakness in the Canadian economy with the December homes sales data coming in much lower than November’s number ( -0.9% vs prior 0.6%), while housing stats and building permits also missed expectations. Jobs and wages data have been mixed of late, with the unemployment rate falling to 5.6 from 5.9% while hourly wage rate fell to 3.8% from a prior 4.4%.
The Bank of Canada will also release its quarterly growth and inflation forecasts today and these may provide clues for traders going forward. Governor Poloz may well tone down his recent hawkish stance, especially if he believes that the current level of the Canadian Dollar is too high.
USD/CAD Stuck in a Rut
The Loonie has traded in a tight range against the US dollar over the last two weeks with the pair kept in check by the January 9 candle’s range of 1.3026 to 1.3105. Support continues to hold whenever it is tested, while the upside may be vulnerable if BoC governor Poloz hints at a policy shift. The 20-dma is also providing support, while the CCI indicator continues to move higher and nears overbought territory. A trade and close above 1.3105 would also break a series of lower highs from mid-November.
USD/CAD Daily Price Chart (August 2019 – January 22, 2020)
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