The loonie soars after Canada maintains rates

The USD/CAD fell under pressure as Canada maintains overnight lending rate

Charts (4)

The USD/CAD fell under pressure as Canada maintains overnight lending rate.

New BOC governor Tiff Macklem holds Canada's overnight rate at 0.25% and pledges to hold until a 2% inflation target is achieved. The Bank of Canada does not see inflation reaching the 2% target next year. 

The US Dollar was bearish against most of its major pairs on Wednesday with the exception of the CHF.  

On the economic data front, the Mortgage Bankers Association's Mortgage Applications increased 5.1% for the week ending July 10th, from +2.2% in the previous week. Empire Manufacturing spiked to 17.2 on month in July (10.0 expected), from -0.2 in June. Industrial Production rose 5.4% on month in June (4.3% expected), from +1.4% in May. The Federal Reserve's Beige Book stated that economic activity increased in most Districts, but remained far below where it was before the COVID-19 pandemic. Employment increased on net in most Districts as numerous businesses reopened and/or increased activity, however payrolls in all Districts were well below pre-COVID levels. Districts also noted a difficulty in bringing back workers due to health and safety concerns, childcare needs and generous unemployment insurance benefits.    

On Thursday, Retail Sales Advance for June are expected to release +5.0% on month, from +17.7% in May. Initial Jobless Claims for the week ending July 11th are expected to decline to 1,250K, from 1,314K in the week before. Finally, Continuing Claims for the week ending July 4th are expected to fall to 17,500K, from 18,062K in the prior week.      

The Euro was bearish against most of its major pairs with the exception of the CHF. In Europe, the U.K. Office for National Statistics has released June CPI at +0.6% (vs +0.4% on year expected). 

The Australian dollar was bullish against most of its major pairs with the exception of the NZD and CAD.

One of the largest currency pair decliners on Wednesday was the USD/CAD which dropped 104 pips to 1.3511. Prices broke below a consolidation range between 1.3537 and 1.3646. Look towards a test of 1.3492 support and 1.34785 in extension. 

Source: GAIN Capital, TradingView

Happy Trading

More from Forex

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.