CANADIAN DOLLAR OUTLOOK: USD/CAD, EUR/CAD, CAD/JPY PRICES REACT TO BANK OF CANADA DECISION
- Bank of Canada (BOC) just released its latest monetary policy statement and left its target interest rate unchanged at 0.25%
- USD/CAD and EUR/CAD prices jumped and spot CAD/JPY pivoted lower immediately after the BOC decision crossed the wires
- Canadian Dollar (CAD) is coming under pressure as FX traders digest dovish central bank outlook underpinned by sluggish inflation expectations post-COVID
The Canadian Dollar is edging lower in the wake of the BOC statement that just crossed the wires. Bank of Canada officials agreed to leave the policy interest rate unchanged at 0.25% as expected. The central bank also reiterated that it will continue its QE program running at C$5-billion purchases of Canada government bonds per week.
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USD/CAD PRICE CHART: 1-MINUTE TIME FRAME (15 JULY 2020 INTRADAY)
USD/CAD price action pressed higher in the wake of the Bank of Canada decision. The Canadian Dollar remains in positive territory on the day against its USD peer, however, as the US Dollar trades broadly alongside other safe-haven assets.
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Canadian Dollar weakness following the BOC statement is likely explained by dovish verbiage regarding interest rate and inflation outlook. The Bank of Canada governing council noted they plan on holding the overnight cash rate at its current level until economic slack is absorbed and inflation measures recover to target.
EUR/CAD PRICE CHART: 1-MINUTE TIME FRAME (15 JULY 2020 INTRADAY)
EUR/CAD price action whipsawed in the wake of the latest BOC statement. The Euro aimed higher initially against the Loonie, but the pop was short-lived with spot EUR/CAD since pivoting back lower to trade at fresh session lows. Perhaps a rejection of technical resistance around 1.5500-handle, which is underpinned by May’s swing high, could partly explain the stretch of EUR/CAD weakness.
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Additionally, the European Central Bank is on tap to release its own monetary policy update on Thursday, 16 July at 11:45 GMT and leaves the Euro at risk ahead of this potentially market-moving event.
CAD/JPY PRICE CHART: 1-MINUTE TIME FRAME (15 JULY 2020 INTRADAY)
Spot CAD/JPY gyrated following the Bank of Canada decision. The Canadian Dollar dipped into negative territory against the interest-rate sensitive Japanese Yen, but CAD/JPY prices have since ripped back higher and trade flat on the day.
Also noteworthy, the Canadian Dollar might be facing headwinds from crude oil price action due to the strong direct relationshiptypically held between the two assets. Oil is currently digesting recent commentary from Saudi Arabia and Russia agree to unwind recent production cuts next month.
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