USD/CAD Daily Price Forecast – USD/CAD Trading Near Flat As Loonie Wrestles For Control Ahead of BOC Rate Update

The Canadian dollar shook off the plunge in oil price action yesterday and stood firm against its U.S. counterpart as investor’s maintained bets that the Bank of Canada (BOC) will hike interest rates later today. As of writing this article, USD/CAD pair is trading at 1.3095 up 0.08% on the day.

Crude slid after a sudden increase in US stockpile data released yesterday but US crude WTIUSD was trading positive in Asian and early European market hours as Saudi Arabia said it could supply cruder quickly if needed, easing concerns ahead of U.S. sanctions on Iran which supported Canadian Loonie on its bull run in early market hours but Brent crude failed to make a recovery and moves bearish weighing down Loonie. The recent sell-off in global equities has also raised worries about slowing growth curbing demand for crude.

BOC Forward Guidance to Decide CAD’s Short-Term Price Momentum

While BOC is expected to raise rates during policy meet today, both BOC and US Fed will have to think about the need for tighter policy if global equity markets go off the rails. CAD is expected to continue maintaining upward price action ahead of BOC update as the market has fully priced in a rate hike announcement during today’s update. The pair caught a fresh bid-wave and embarked upon a steady recovery mode to regain the 1.31 handle before meeting fresh supply at the last, as the bulls await the BOC monetary policy decision for the next push higher.

The latest leg higher in the spot can be attributed to resurgent US dollar demand, mainly driven by a sell-off in the EUR and the GBP, in the wake of the European political woes. Moreover, markets prefer to hold the safe-haven US dollar in times of softer risk sentiment. Post BOC update CAD would retain upper hand if BOC confirms 25bps rate hike and provides positive guidance for future, while a dovish forward guidance could see USD regaining the upper hand. The pair is trading nearly flat at USD seems to have recovered most of the losses from early trading hours. Expected support and resistance for the pair are at 1.3048, 1.3005, 1.2954 and 1.3100, 1.3120, 1.3226 respectively.