(1 Hour post event )
(End of Day post event)
05/30/2018 14:00:00 GMT
May 2018 Bank of Canada (BoC) Interest Rate Decision
The Bank of Canada (BoC) endorsed a hawkish outlook for monetary policy after keeping the benchmark interest rate on hold in May as ‘inflation in Canada has been close to the 2 per cent target and will likely be a bit higher in the near term than forecast in April.’ The recent comments suggest the BoC will continue to normalize monetary policy in 2018 as ‘developments since April further reinforce Governing Council’s view that higher interest rates will be warranted to keep inflation near target.’
The Canadian dollar rallied following the hawkish rhetoric, with USD/CAD slipping below the 1.29000 handle to end the day at 1.2873.
USD/CAD Daily Chart
- Broader outlook for USD/CAD remains constructive as the exchange rate appears to be responding to trendline support, but the Relative Strength Index (RSI) highlights a different dynamic as the oscillator fails to preserve the bullish formation from earlier this year.
- At the same time, failure to test the 1.2980 (61.8% retracement) to 1.3030 (50% expansion) region instills a constructive outlook for USD/CAD especially as the pair snaps the series of lower highs & lows from the previous week.
- With that said,need a closing price above the 1.3130 (61.8% retracement) hurdle to favor a larger recovery, with the next area of interest coming in around 1.3290 (61.8% expansion) to 1.3310 (50% retracement) followed by the Fibonacci overlap around 1.3420 (78.6% retracement) to 1.3460 (61.8% retracement).
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— Written by David Song, Currency Analyst
Follow me on Twitter at @DavidJSong.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.