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USD/CAD – Canadian Dollar Gains Ground as BoC Cautiously Optimistic

The Canadian dollar has posted strong gains after the BoC held rates and sent a positive message to the markets. EUR/GBP has posted sharp losses, as British Construction PMI beat the forecast.
Kenny Fisher

The Canadian dollar is stronger on Wednesday, as USD/CAD has sustained considerable losses. In the North American session, USD/CAD is trading at 1.3198, down 0.70% on the day.

Bank of Canada Holds Rate

The Bank of Canada had no surprises up its sleeve, as it maintained the benchmark rate at 1.75% at its monthly policy meeting on Wednesday. The rate statement was positive, which helped boost the Canadian dollar. The bank said that there was “nascent evidence that the global economy is stabilizing” and that recession concerns had eased. Despite the somewhat optimistic rate statement, the economy is expected to slow to 1.3% in Q3, a much weaker figure than the robust clip of 3.7% in Q2. The global trade war continues to take a toll on exports and business investment, and high levels of household debt is likely to constrain consumer spending. The BoC hinted that it is leaving the door open to further rate cuts next year, with the U.S-China trade war continuing to pose a downside risk to the Canadian economy.

Technical Analysis

USD/CAD has broken below support at the 1.3230 line and is putting strong pressure on the 1.3200 line. On the upside, the 50-EMA and 200-EMA are both touching the candlesticks. The 50-EMA is at 1.3236 and the 200-EMA is at 1.3239. If the 50-EMA crosses over the 200-EMA, this would be a bullish sign for the pair (“golden cross”). Above, the resistance line of 1.3300 has some breathing room after losses by USD/CAD.

USD/CAD 1-Day Chart

EUR/GBP

EUR/GBP has posted strong losses on Wednesday. Currently, the pair is trading at 0.8458, down 0.81% on the day. On the fundamental front, British Services PMI came in at 49.3, which beat the forecast of 48.6 pts. This has boosted the pound against both the euro and the dollar.

Technical Analysis

The downward trend continues for EUR/GBP. The pair has broken below major support at 0.8500 and has room to drop all the way to 0.8400, which is the next support level. On the upside, the line of 0.8560 has strengthened in resistance, following the losses by EUR/GBP on Wednesday.

EUR/GBP 1-Day Chart
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