25 Feb 2015
CAD gains as rate cut bets unwind
FXStreet (Mumbai) - The Canadian dollar continued to move higher against its US counterpart, taking the USD/CAD pair well below 1.25 levels after the comments from Bank of Canada governor Poloz yesterday were read by markets as a hint of no interest rate cut in the next week.
Could gains in CAD last?
The Canadian dollar appreciated after BOC governor Poloz did not provide a clear signal about whether the Bank of Canada will again lower interest rates at next week’s policy meeting, but said last month’s quarter-point cut buys time to see how the economy responds. Markets saw his comments as hint that the BOC could pause on March 4 instead of cutting rates as many had expected.
However, it remains to be seen whether the gains in the CAD are sustained, especially since Crude prices are falling once again on concerns of excess supply. Governor Stephen Poloz reiterated that collapsing oil prices are a “net negative”. The crude prices could weaken today if the weekly inventory data in the US show a further buildup of crude stocks. In such a case the CAD may erase the gains.
USD/CAD Technical Levels
The pair currently trades 0.18% lower at 1.2464. The immediate support is seen at 1.2420 (Feb. 20 low), under which it could fall to 1.2389. On the flip side, resistance is seen at 1.25 and 1.2572 levels.
Could gains in CAD last?
The Canadian dollar appreciated after BOC governor Poloz did not provide a clear signal about whether the Bank of Canada will again lower interest rates at next week’s policy meeting, but said last month’s quarter-point cut buys time to see how the economy responds. Markets saw his comments as hint that the BOC could pause on March 4 instead of cutting rates as many had expected.
However, it remains to be seen whether the gains in the CAD are sustained, especially since Crude prices are falling once again on concerns of excess supply. Governor Stephen Poloz reiterated that collapsing oil prices are a “net negative”. The crude prices could weaken today if the weekly inventory data in the US show a further buildup of crude stocks. In such a case the CAD may erase the gains.
USD/CAD Technical Levels
The pair currently trades 0.18% lower at 1.2464. The immediate support is seen at 1.2420 (Feb. 20 low), under which it could fall to 1.2389. On the flip side, resistance is seen at 1.25 and 1.2572 levels.