USDCAD declines as the Bank of Canada starts out well by 25 bps. The language indicating that the Bank of Canada is ready to hike rates further if necessary was removed from the BoC release
USDCAD – BOC Points
The language in the BoC statement describing how the central bank is ready to raise rates further if necessary has been removed. The US dollar gains vs CAD
The Bank of Canada raised rates by 25 basis points because excess demand seemed to be more persistent than expected.
The April figures show that underlying price inflation is still a concern.
USDCAD moved by BOC liquidity remarks
The BOC complieU moved by liquidity specfic remarks with the RBA and announced a 25 basis point increase. As the Central Bank emphasized that the economy’s surplus capacity appears to be more enduring than expected. The BoC believes since the rate increase. Which reflect worries that its fiscal stance wasn’t adequately tight to restore supply and demand to balance.
BOC believes that Inflation Remains High
The statistics from April indicated increases in a wide variety of items, and service price inflation remains high. According to the BoC, who highlighted upside risks associated with price concerns. The concern over leading Central Banks fear CPI inflation might become trapped greatly beyond the 2% objective. It is an alarming statement and one I have speculated on for the previous several months.
A rise in tonear 50% probability a subsequent boost in July. Plus, a full price in additional tightening by Sept were observed right after the meeting.
THE CONSEQUENCES GOING FORTH
After starting the hike cycle earlier than its competitors, the (BoC) is still in the lead. It might contribute to the fact that Canada’s inflation situation remains to be better than that of the euro zone and the US. Despite that, BoC Governor stressed the Central Bank’s readiness to take action if needed. And reaffirmed that risks related to inflation remain a worry.
Source: FinancialJuice, ING
Market Response
Initially, the USDCAD fell by 80 pip after reaching a little support at the 1.3320 region. It is currently trading at 1.3350. Having greater highs followed by lower levels. Recent market movement has given an unclear image of the larger picture for USDCAD. After the triangular breakout, duo was unable to overcome the resistance zone at 1.3650. And now seems destined to trade in a range for the foreseeable future. Since the 50, 100, and 200-day MA are converging in this level around 1.3500, it may be difficult for bulls to go higher in this area. The latest top of 1.3650 and its April 14 bottom of 1.3300 are likely to be crucial for the duo’s next big shift.
Key Levels to Monitor
Resistance Levels
-50, 100, and 200-day MA crossover regions are at 1.3500.
-1.3650
Support Levels
-1.3300
-1.3250
