- BoC policymakers are under more pressure to cut rates than other major central banks.
- Economists predict two rate cuts in the US this year.
- Ludi came under pressure when oil prices hit a six-week low in the previous session.
USD/CAD price analysis shows more upside potential as Canadian dollar weakens ahead of Bank of Canada policy meeting. At the same time, the currency fell amid falling oil prices. Meanwhile, the dollar strengthened as investors awaited economic reports from the US.
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Markets are gearing up for the Bank of Canada’s policy meeting later in the day. Investors expect the central bank to implement its second rate cut. Meanwhile, the Fed has yet to start cutting interest rates.
BoC policymakers are under more pressure to cut rates than other major central banks. Inflation in Canada has declined faster than expected and is currently within the central bank’s target of 1%-3%. At the same time, the economy is rapidly declining, and the latest retail sales report shows that consumer spending is weaker than expected. Consequently, high rates burden economic activity and must be reduced.
This is not the case in the US. Inflation has taken time to fall, and the economy remains resilient. Retail sales data came in better than expected, pointing to strong consumer spending. Although economists forecast two U.S. rate cuts this year, they noted that policymakers may remain cautious.
Meanwhile, the hawk came under pressure as oil prices hit a six-week low in the previous session amid increased likelihood of a Gaza ceasefire. Moreover, China’s economy performed poorly in the second quarter, dampening the outlook for oil demand.
USD/CAD Key Events Today
- BPC Monetary Policy Report
- BOC exchange rate statement
- US manufacturing PMI
- US flash services PMI
- BPC press conference
USD/CAD Technical Price Analysis: Uptrend intensifies above 1.3750 barrier
On the technical side, the USD/CAD price continued its bullish movement, breaking above the resistance level at 1.3750. This move is now stopped near the key psychological level of 1.3800. However, the bullish bias remains strong, with the price well above the 30-SMA. At the same time, the RSI is in the overbought region, indicating solid bullish momentum.
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Therefore, USD/CAD can only pause briefly before breaking above 1.3800. Even if it pulls back, it may not go below the 30-SMA.
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