USD/CAD hits fresh four-month highs near 1.3800 after BoC
- Bank of Canada keeps interest rates unchanged, as expected.
- Loonie weakens across the board, extending daily losses.
- USD/CAD resumes upside looks at 1.3800.
The USD/CAD rose after the Bank of Canada meeting, reaching the highest intraday level since early November at 1.3793. The Loonie weakened across the board. The central bank kept rates unchanged as expected
BoC: No more 'excess demand'
The Bank of Canada (BoC) kept its key interest rate unchanged at 4.50%, as expected. “Governing Council will continue to assess economic developments and the impact of past interest rate increases, and is prepared to increase the policy rate further if needed to return inflation to the 2% target.”
According to the statement, “the latest data remains in line with the Bank’s expectation that CPI inflation will come down to around 3% in the middle of this year. Year-over-year measures of core inflation ticked down to about 5%, and 3-month measures are around 3½%. Both will need to come down further, as will short-term inflation expectations, to return inflation to the 2% target.” The BoC no longer sees “the economy in excess demand”.
The Loonie hit fresh daily lows after the report. USD/CAD moved to the 1.3790 zone, without significant impulse yet, limited by a weaker US Dollar. The Greenback is pulling back modestly amid a recovery in Treasury bonds.
Data from the US showed the Automatic Data Processing (ADP) report surpassed expectations by showing private sector employers added 242K jobs in February, above the 197K of market consensus. The JOLTS Job Openings survey came in also above expectations, at 10.82 million, down from January’s 11.23.
The US Dollar is holding onto important weekly gains after soaring Tuesday on the back of Fed Chair Jerome Powell’s testimony before the US Congress. He opened the doors to a larger rate hike at the March FOMC meeting. Powell is again at the US Congress and will take questions from lawmakers. Later, in the American session the Fed will release the Beige Book.
Jerome Powell Testimony: All about Fed Chair's second day in US Congress
The USD/CAD continues to move with a bullish bias, looking at the 1.3800 area. The next resistance might be located at 1.3825. Over the last 24 hours, the pair has risen almost 200 pips.
Technical levels