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01/17/2018 15:00:00 GMT
January 2018 Bank of Canada (BoC) Interest Rate Decision
USD/CAD 10-Minute Chart
The Bank of Canada (BoC) increased the benchmark interest rate to 1.25% in January as ‘recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity.’ However, unlike 2017, it seems as though the central bank will refrain from delivering a series of rate-hikes as ‘some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target.’
The Canadian dollar struggled to hold its ground following the dovish rate-hike, but the reaction was short-lived, with USD/CAD pulling back to end the day at 1.2435. Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.
USD/CAD Daily Chart
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- Topside targets remain on the radar for USD/CAD following the break of the December-high (1.2920), but the near-term outlook is getting clouded with mixed signals as the pair snaps the series of higher highs & lows carried over from the previous week.
- Will keep a close eye on the Relative Strength Index (RSI) as it struggles to hold above 70 and falls back towards trendline support, with a break of the bullish formation raising the risk for a larger pullback in the dollar-loonie exchange rate.
- String of failed attempts to break/close above the 1.3290 (61.8% expansion) to 1.3310 (50% retracement) region may generate a larger pullback in USD/CAD, with a move back below the 1.2720 (38.2% retracement) to 1.2770 (38.2% expansion) bring the downside targets back on the radar as the near-term rally in the exchange rate appears to be getting exhausted.
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— Written by David Song, Currency Analyst
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