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Canadian Dollar Forecast: USD/CAD, CAD/JPY Levels to Watch on BoC

Canadian Dollar Forecast: USD/CAD, CAD/JPY Levels to Watch on BoC

Justin McQueen, Strategist

CAD Analysis and Talking Points

  • Bank of Canada to Stand Pat on Policy
  • USD/CAD Carves Out Double Bottom
  • CAD/JPY Testing Key Support

Bank of Canada to Stand Pat on Policy

The Bank of Canada rate decision at 1500BST will garner attention for the Canadian Dollar. Expectations are for the central bank to stand pat on monetary policy, in which rates will remain at 0.25%, while LSAPs will be maintained at a weekly rate of CAD 5bln. In turn, focus will be largely on the accompanying statement. While recovery signals have been somewhat better than expected by the BoC, the central bank will likely maintain a cautious outlook to signal that they will not apply the brakes on current stimulus anytime soon.

USD/CAD Carves Out Double Bottom

The Canadian Dollar has been led lower in recent sessions by the equity and oil rout, while corrective moves in the US Dollar has seen USD/CAD carve out a double bottom at 1.30 following the move above 1.32. The current risk environment remains the key driver for the Loonie and we remain the case, despite today’s BoC meeting. On the topside, the correction in USD/CAD is likely to struggle above 1.33, provided the risk environment stabilises. However, a close above 1.3315 paves the way for an extension towards 1.34.

Canadian Dollar Technical Levels

Support

Resistance

1.3200

-

1.3300

-

1.3160

Sep 3rd High

1.3315

Jun 8th Low

1.3130

-

1.3400

-

DailyFX Economic Data and Events Calendar

USD/CAD Price Chart: Daily Time Frame

Canadian Dollar Forecast: USD/CAD, CAD/JPY Levels to Watch on BoC

Source: IG Charts

Top 10 Candlestick Patterns To Trade the Markets

CAD/JPY: A notable reversal stemming from the tech led rout takes the cross back to key support at 79.70-80. In the short-term this is the area to watch, whereby a break below opens the door to 79.40-50.

CAD/JPY Chart: Daily Time Frame

Canadian Dollar Forecast: USD/CAD, CAD/JPY Levels to Watch on BoC

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

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