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USD/CAD bulls waiting for dovish shift in the Bank of Canada’s rhetoric

April 24, 2019 11:00

USD/CAD economic events

Source: Economic Events April 24, 2019 - Admiral Markets' Forex Calendar


The technical picture for the USD/CAD remains very interesting, particularly with today's rate decision coming from the Canadian central bank.

Last week's Canadian inflation data was published, coming in at 1.9% (YoY) for March 2019, up from 1.5% from the previous month; meeting market expectations while printing at the highest level since December, so it will be interesting to see if the Bank of Canada shows a slight hawkish touch.

When looking at the resulting price action of the USD/CAD after last week's inflation rate and seeing that the CAD didn't take on any serious momentum, stabilising above 1.3250, it appears that market participants don't see a hawkish shift, especially after last March's rate decision and rhetoric.

Lat March, Governor Poloz and his colleagues removed the tightening bias in their statement, acknowledging "more pronounced and widespread" global economic slowdown, and noted that "trade tensions and uncertainty are weighing heavily on confidence and economic activity" and "global economic prospects would be buoyed by the resolution of trade conflicts."

In this context, any dovish hints have the potential to initiate a bullish breakout above 1.3470, activating current yearly highs of around 1.3670/3700 as an initial target.

Technically, only a drop below 1.3250 would darken the technical picture, and activate 1.3080/3100 on the downside.

USD/CAD index daily chart

Source: Admiral Markets MT5 with MT5-SE Add-on USD/CAD Daily chart (between January 23, 2018, to April 23, 2019). Accessed: April 23, 2019 at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of the USD/CAD increased by 9.4%, in 2015, it increased by 19.1%, in 2016, it fell by 2.9%, in 2017, it fell by 6.4%, in 2018, it increased by 8.4%, meaning that after five years, it was up by 28.4%. Click on the banner below to download MetaTrader 5, and begin trading today!

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