USD/CAD prints three-day updates and has been modestly bid recently.
The pre-BOC cautious attitude favors bulls due to broad US dollar rise and WTI drop.
The BOC may leave benchmark rates steady, but it may continue to cut bond purchases.
Powell’s, and other Fed officials’, covid updates are becoming increasingly essential.
During Wednesday’s Asian session, bids for the USD/CAD rise to 1.2521, up 0.05 percent intraday. On broad US dollar strength the previous day, the Loonie pair surged the most in over a week, but cautious sentiment ahead of the Bank of Canada’s (BOC) monetary policy announcement appears to be testing the bulls of late.
The robust US Consumer Price Index (CPI) data for June was a major driver of the upward trend. The headline inflation rate increased from 4.9 percent to 5.4 percent year on year, while the core rate was revised up from 3.8 percent to 4.5 percent.
Concerns about the coronavirus (COVID-19) variant also favored USD/CAD purchasers. The US debates the need for a third vaccine shot, as the UK reports the largest number of covid-related deaths since April. On July 13, Canada’s formerly hard-hit British Columbia (BC) reports no covid-related deaths and 33 cases.
While Canadian economists have recently trumpeted the benefits of the pandemic’s end, the situation appears to be different abroad. The BOC is being pushed to consolidate monetary easing in order to stay ahead of the curve.
Following Tuesday’s modestly negative performance, S&P 500 Futures remain depressed around record highs, while US 10-year Treasury rates halt after a three-day run-up near 1.41 percent.
Moving on, the Bank of Canada is unlikely to change its benchmark rate of 0.25 percent, but it may reduce its weekly asset purchases to C$2 billion. While the same is predicted, USD/CAD traders will keep a watch on the BOC Governor and Senior Deputy Governor’s news conference, which will take place at 15:00 GMT, for new direction.
Read the Bank of Canada’s Predictions: To pave the path for a stronger CAD, QE will be tapered.
USD/CAD buyers are battling downward resistance lines that run from late January to December 21, 2020, around 1.2435 and 1.2545-50, respectively. Bears, on the other hand, are less inclined to take a chance on entry unless the price remains above a six-week-old rising support line near 1.2365./n
