Source: Economic Events July 17, 2019 - Admiral Markets' Forex Calendar
The USD/CAD is currently eyeing a technically interesting level: the region around 1.3000.
A break lower could level the path down to 1.2780, which is definitely an option after last week. On Wednesday, comments made from US Fed chairman Powell at his testimonial before the House Financial Services Panel impacted the currency pair, while at the same time the BoC published their latest monetary policy statement.
While Powell said that a number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling, and Brexit, there is a risk that weak inflation will be even more persistent than the Fed currently anticipates, which brings back speculations of a 50bp rate cut from the Fed by the end of July. The BoC left interest rates at 1.75% on hold, even though they said that recent Canadian economic strength is not sustainable.
Still, the BoC statement didn't clearly point to lower borrowing costs in the near-term similar to the Fed, which leaves the CAD as a potential strong performer against the USD, especially if inflation data today at 1230pm GMT comes in above 2% (as expected).
In fact, a higher than expected inflation reading is a serious option with WTI having gained more than 15% in June against the mark of 50 USD per barrel:
Source: Admiral Markets MT5 with MT5-SE Add-on USD/CAD Daily chart (between April 27, 2018, to July 16, 2019). Accessed: July 16, 2019 at 10:00 PM GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2014, the value of the USDCAD 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%.
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