The USDCAD rate fell sharply from 1.3400 to 1.3225 (-175 pips) as the canadian dollar soared against the US dollar following the Bank of Canada's decision to leave their overnight interest rate unchanged at 0.5% (Wednesday 15:00 GMT). The USDCAD rate was confined to a narrow range in the prior Asian session and a small short covering rebound in Europe to 1.3280 Thursday 9:00 GMT as traders are staying on the sidelines ahead of the ECB monetary policy announcement later today at 12:45 GMT.
The Bank of Canada left their key lending rate unchanged at 0.5% as expected Wednesday 15:00 GMT. In their accompanying statement, the central bank repeats the risk to the inflation outlook is "roughly balanced" and the current monetary policy stance is appropriate. Near term economic outlook is unchanged and the 4th QTR GDP is not as weak as expected. Factors that pushed CPI above 2% is likely to unwind in the coming months, excess capacity will continue to dampen the core inflation.
The canadian dollar continues to gain in Europe staying at the 1.3240 level with new highs in oil despite the US gulf crude stokpiles at record highs. Near-term support: 1.3245 - 14 DMA, 1.3230, 1.3162, 1.3125. Resistance: 1.3260, 1.3280, 1.3320.14-DMA 1.3390.