The Canadian Dollar is currently down by 0.2% against the US Dollar yet remains stronger than the rest of the G10 currencies. This shift occurs as markets prepare for the Bank of Canada’s (BoC) policy decision on Wednesday, where a hold at 2.75% is anticipated.<\/p>\n
The BoC continues to have a slightly dovish stance due to concerns about trade and global growth. Despite these concerns, underlying inflation persistence and domestic economic resilience, such as the strength in June’s employment report, provide balance.<\/p>\n
USD\/CAD has been trading within a stable range since early June, with current support below 1.3600 and resistance above 1.3750. The Relative Strength Index is at 50, indicating a lack of momentum, though recent gains suggest a possible break above the 50-day moving average at 1.3697.<\/p>\n
Future prospects for USD\/CAD are observed with near-term support below 1.3680 and resistance above 1.3780. These figures are essential for those monitoring the currency pair’s movements and potential shifts in the market.<\/p>\n
We believe derivative traders should focus on the upcoming policy decision as the primary market catalyst. The central bank is widely expected to hold its key interest rate at 5.00% after becoming the first G7 nation to cut rates in June. This reinforces the slightly dovish stance mentioned due to concerns about global growth.<\/p>\n
The case for a hold is balanced by conflicting domestic signals, creating an opportunity for traders. Canada’s headline inflation recently cooled to 2.9% in May, falling within the target range and supporting a patient approach. However, the labor market showed signs of softening as the unemployment rate ticked up to 6.2% despite a modest gain in employment.<\/p>\n
Given the currency pair’s stable trading range and a neutral Relative Strength Index, we would consider strategies that profit from a potential breakout. Buying a strangle or straddle using options with expirations shortly after the announcement could capitalize on the expected increase in volatility. Historically, policy announcements often resolve such periods of consolidation with a sharp move in either direction.<\/p>\n
For those with a directional view, we see key levels to structure trades around. A surprisingly dovish statement could push the pair towards resistance above 1.3780, making long calls an attractive position. Conversely, any unexpectedly hawkish language emphasizing inflation persistence could see the pair test support below 1.3680, favoring the purchase of puts.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Canadian Dollar dips 0.2% but outperforms G10 peers; BoC policy decision eyed amid inflation concerns.<\/p>\n","protected":false},"author":62,"featured_media":16959,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-27473","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/27473","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=27473"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/27473\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16959"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=27473"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=27473"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=27473"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}