Canadian dollar to strengthen as BoC moves ‘aggressively’ on rate hikes

Canadian dollar to strengthen as BoC moves ‘aggressively’ on rate hikes

Canadian dollar

USDCAD is trading up 0.03% at 1.2572

The Canadian dollar will gain ground over the coming year as high commodity prices bolster Canada’s economic outlook and the Bank of Canada likely continues to raise interest rates aggressively, a Reuters poll showed.

The loonie is the only G10 currency to keep pace with the U.S. dollar, a magnet for safe-haven flows, in 2022.

The median forecast in the poll was for Canada’s currency to strengthen 0.4% to 1.26 per U.S. dollar, or 79.37 U.S. cents, in three months’ time, compared to 1.2568 in last month’s forecast. It was then expected to climb to 1.23 in a year’s time.

“I think there (are) pretty solid reasons to be constructive on the CAD in the medium term,” said Shaun Osborne, chief currency strategist at Scotiabank.

“The Bank (of Canada) is taking a very proactive approach to policy making… Monetary policy is potentially going to move a little bit more quickly and maybe a bit more aggressively than the Fed (U.S. Federal Reserve) in the next six months.”

The BoC opened the door to a more aggressive pace of tightening on Wednesday, saying it was prepared to act “more forcefully” if needed to tame inflation, even as it went ahead with a historic second consecutive half-percentage-point rate increase, lifting its benchmark rate to 1.50%.

On technical fronts USDCAD RSI stood at 13.94 and currently it is trading below all MA. So, SELL position can be taken with following target and stoploss:

TRADE SIGNAL – : USDCAD – SELL: 1.2570, TARGET: 1.2553, STOP LOSS : 1.2587

About Author

Related posts

European stock markets

European Stocks Largely Higher; DAX Underperforms After Trade Deficit 

FTSE 100 is trading up 0.65% at 7196.67 European stock markets edged largely higher Monday, starting the new week on a positive note despite the Wall Street holiday limiting activity. By 03:40 AM ET (0740 GMT), the DAX in Germany traded 0.1% lower, while the CAC 40 in France...

Read More

Copper set to end June with a 16-month low

The price of COMEX Copper futures is down 2.33% at 3.6925 per pound on mid-Thursday trades. Copper prices further declined on Thursday. This makes copper prices on track for the biggest quarterly percentage fall since March 2020. The potential of a recession occurring coupled with the decline in demand...

Read More

Leave a Reply