USDCAD, H1 and H4
Bank of Canada raised rates 25 bps, as expected, taking the rate target to 1.50%. The announcement was upbeat: the Bank maintained its projection for close to 2% GDP growth over 2018-2020, despite near term volatility in growth rates. The impact of the steel and aluminium tariffs are expected to be modest on growth and inflation. Housing is beginning to stabilize, according to recent data. The loonie was mentioned for the first time since last October — “Meanwhile, oil prices have risen. But the Canadian dollar is lower, reflecting broad-based US dollar strength and concerns about trade actions.” They repeated the key view from May, saying “higher interest rates will be warranted to keep inflation near target and will continue to take a gradual approach, guided by incoming data.” The announcement and optimistic outlook on the economy are consistent with further rate hikes going forward — we expect a follow up 25 bps move in October.
USDCAD broke 1.3100 Support, after the 25bp rate hike announcement from BoC and is currently trading a breath above 3-week lows of 1.3066. As stated in morning’s report a close today below the week low at 1.3066 could open the way towards 50-day MA and latest low fractal at 1.2950-1.3000 area.
Next is BoC press conference at 15:15 GMT.
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Andria Pichidi
Market Analyst
HotForex
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