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USD/CAD Snaps Lower, Canadian Dollar Soars as BoC Tapers Policy

USD/CAD Snaps Lower, Canadian Dollar Soars as BoC Tapers Policy

Rich Dvorak, Analyst

CANADIAN DOLLAR PRICE OUTLOOK: USD/CAD PIVOTS LOWER, BANK OF CANADA REMOVES EMERGENCY LIQUIDITY PROGRAMS

  • USD/CAD price action pivoted lower by 40-pips in response to the latest BoC news
  • Bank of Canada announces normalization of its emergency monetary policy tools
  • Canadian Dollar strengthening sharply due to the BoC policy shift toward tapering

The Canadian Dollar is gaining a considerable amount of ground during Tuesday afternoon trade. USD/CAD price action just snapped 40-pips lower while CAD/JPY spiked 32-pips higher in immediate reaction to the Bank of Canada announcement just crossing market wires. The Bank of Canada just stated that it is removing its emergency lending programs, such as its term repo facility, in a move toward tapering monetary policy.

USD/CAD PRICE CHART: 15-MINUTE TIME FRAME (22 MAR TO 23 MAR 2021)

USDCAD Price Chart Canadian Dollar Technical Outlook

The Bank of Canada also noted that it will not renew commercial paper, province, or corporate bond purchases. That said, the BoC conveyed that it will continue its current pace of QE at C$4-billion per week. This could be helping USD/CAD retrace a bit of its move lower. Furthermore, BoC Deputy Governor Gravelle also mentioned that scaling back bond purchases will be gradual, adding that adjusting QE won’t necessarily signal change in views on when to raise the central bank’s benchmark interest rate.

Keep Reading – Canadian Dollar Outlook: Key USD/CAD, AUD/CAD Levels to Watch

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

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

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