USDCAD Analysis
| Performance after Wednesday | |||||
| Period | Pct | Chg | Momentum | ||
| Wednesday | 0.13% | 17.4 Pips |  |
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| Week to-date | 0.42% | 57.2 Pips | |
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| October | 2.3% | 311.2 Pips |  |
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Upcoming key events (London Time)
No major events for the day.
What happened lately
The Bank of Canada has recently announced a reduction in its policy interest rate, bringing it down from 4.25% to 3.75%. This decision marks a significant shift in Canada’s monetary policy approach, likely aimed at stimulating economic growth and mitigating potential recession risks. With lowered interest rates, borrowing costs decrease for consumers and businesses, which can support increased spending and investment activities across the economy. The central bank’s move may also reflect efforts to maintain inflation targets, suggesting a more accommodative policy stance amid evolving economic conditions. This change in interest rate can influence various sectors, potentially invigorating real estate markets, encouraging consumer borrowing, and supporting business expansions. However, it also indicates a cautious approach towards the country’s economic trajectory, mindful of both domestic and global pressures.
The recent shift in the Bank of Canada’s policy interest rate is poised to impact the USDCAD currency pair. Typically, a reduction in interest rates could lead to a depreciation of the Canadian dollar due to reduced yields on Canadian assets, prompting investors to seek higher returns elsewhere. Consequently, with the Canadian dollar’s potential weakening, the US dollar might gain strength relative to it. This could explain the observed rise in USDCAD to 1.38384 following the central bank’s announcement. As interest rates in Canada are lowered, currency traders and investors might anticipate a diminished demand for the Canadian dollar, thereby affecting exchange rate dynamics in favor of the US dollar. The market perception of Canada’s economic outlook, influenced by the rate adjustment, could continue to sway investor sentiments and trading patterns in the forex markets.
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What can we expect from USDCAD today?
USDCAD on Wednesday rose 0.13% to 1.38384. Price is above 9-Day EMA while Stochastic is rising.
Updated daily direction for USDCAD looks bullish as the pair ended higher after Wednesday trading session.
Looking ahead for the day, immediate upside resistance level is R1 at 1.38637 with break above could target R2 at 1.38889 or figure level area. While towards the downside, we are looking at daily low of 1.38110 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.38626 may suggest continuation after recent positive movement.
For the week to-date, take note that USDCAD is bullish as the pair continued to trade higher and is up by 0.42% over the past few days.
Key levels to watch out:
| R3 | 1.39153 |
| R2 | 1.38889 |
| R1 | 1.38637 |
| Daily Pivot | 1.38373 |
| S1 | 1.38121 |
| S2 | 1.37857 |
| S3 | 1.37605 |
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