CAD : BOC Policy Announcement

(Tue, 8 Dec 2020). The Bank of Canada is expected to leave its overnight interest rate unchanged at 0.25% tomorrow and will also maintain its forward guidance and QE program. The bank sees the economy growing by 4% in 2021 and 4.5% in 2022 after an expected decline of around 5.5% in 2020. The banks’ last meeting on October 28 also noted that ‘oil prices remain about 30% below pre-pandemic level’ but this has changed with the oil complex rallying around 20% since those comments, underpinning the Canadian dollar, especially against a weak US dollar. A nod to the strength of the oil market by BoC governor Tiff Macklem tomorrow may well boost the Loonie further.

The daily USDCAD price chart shows the ongoing weakness in the pair with support levels broken with relative ease. In late-July the pair made a bearish ‘death-cross’ – the 50-sdma trading through the 200-sdma – while USDCAD trades below all three moving averages. The pair has found some support around the 1.2770 area but this is very recent and may not hold for long. Below here we go back to lows seen in May 2018. USDCAD may find some support from the CCI which shows the pair in extreme oversold territory

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