The Canadian Dollar rose against its US counterpart today ahead of tomorrow’s Bank of Canada monetary policy meeting.
The market is expecting them to keep rates the same this time, however at the same time, the policy statement is likely to be dovish. They will probably use it to express their concerns about the domestic labor market and the new global economic and financial conditions following the UK’s vote to departure from the EU. USDCAD fell to a low of 1.2980 today, together with risky assets and high-yielding currencies. It could be just profit taking after the huge declines in the past few weeks.
Some analysts warn of downward risks for the loonie. If the BOC surprises markets tomorrow and instead of holding rates flat decides to cut, then we can expect USDCAD to revisit the highs around 1.3150 and even go higher.
Technical analysts say a daily close above 1.3150 in USDCAD will confirm a bullish breakout of a symmetric triangle inside of which the pair spent more than 3 months! The target of this breakout indicates a move towards the 1.38 technical level.