Most economists are calling for the Bank of Canada to keep it’s overnight lending rate at 5% today after the GDP on Friday confirmed that the economy is slowing. The unemployment rate is starting to rise and inflation is slowing and therefore traders will be paying more close attention to the accompanying statement for forward guidance, if we see a more dovish outlook this could lead to further Cad downside. From a currency perspective the Loony has been on the backfoot against the greenback since hitting highs in mid-July and if we get the anticipated pause from the BOC, plus a dovish outlook and increased potential for another hike from the Fed then we could see the UsdCad break to fresh highs sooner rather than later. We are close to a major resistance level for the pair on the longer term chart and a breakout here could see the potential for the currency to target multi-year highs near 1.4000.
Resistance 2: 1.3875
Resistance 1: 1.3722
Support 1: 1.3490
Support 2: 1.3080
