Dovish BoC Holds Rates Steady - Forex News by FX Leaders
BOC in Focus

A bit earlier today, the Bank of Canada (BoC) elected to hold interest rates firm at 1.75%. The move was widely anticipated by currency traders and came as little surprise to anyone. In response to the BoC announcement, the USD/CAD reversed course by more than 40 pips, erasing session losses.

For the time being, the global theme among central bankers is “uncertainty.” Trade tensions and tariff escalations are being credited with threatening global economic growth prospects. This has led the lionshare of central banks to take a wait-and-see approach before making any big policy changes. 

It will be interesting to see what occurs internationally following the FED’s presumed July 31 rate cut. Could the BoC be next in line to slash rates? The smart money is probably betting yes.

BoC Announcement Prompts Reversal In The Loonie

Going into the BoC announcements, the CAD was putting together a solid session against the Greenback. Rates were well below 1.3100 and threatening to extend the intraday bearish trend. At press time (11:30 AM EST), it appears rates are establishing a footing above 1.3100.

USD/CAD, Daily Chart
USD/CAD, Daily Chart

Here are the levels to watch for the remainder of the session:

  • Resistance(1): Daily SMA, 1.3114
  • Support(1): Swing Low, 1.3037

Overview: In a Live Market Update from Monday, I issued a short trade recommendation for the USD/CAD. The play was a success, producing 25 pips profit. Now, the waters are a bit muddier following today’s BoC statement.

With the FOMC Minutes rapidly approaching and FED Chair Jerome Powell answering questions on Capitol Hill, anything can happen to the USD/CAD. If you are holding open positions in the Loonie, be sure to have your stop losses in queue to protect against the unexpected.

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About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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