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Breaking News: USD/CAD Rose 120 Pips After BoC’s Cautionary Comments

Breaking News: USD/CAD Rose 120 Pips After BoC’s Cautionary Comments

[fa icon="calendar"] October 31, 2019 at 3:40 PM / by Fullerton Markets

With Bank of Canada (BoC) cutting domestic and global growth forecast, we can expect further profit-taking from long Canadian dollar trades. USD/CAD could rise further.

BoC held rates, as widely expected last night, at 1.75% but cut its domestic and global growth forecast which surprised the market. Governor Poloz said the "resilience of Canada's economy, will be increasingly tested.”

Instead of focusing on the strength of the labour market and positive outlook of the economy, Governor Poloz saw outlook weakening since July with trade conflicts likely to cause business investments and exports to shrink in the second half of the year.

The bank revised its 2019 Canadian growth projection upwards to 1.5% from 1.3% while reducing its 2020 and 2021 forecasts to 1.7% from 1.9% and 1.8% from 2.0% respectively.

The central bank however did not mention future rate moves and said that the current level of stimulus remained appropriate. The dovish stance from BoC took USD/CAD from its bottom to a weekly highly of 1.3200.

With Federal Reserve done with easing for the year, we could see a resumption of strength into dollar while Canadian dollar will continue to be pressured. USD/CAD could rise back to 1.3200 if NFP turns out stronger on Friday.

Breaking News 20191031

 

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Topics: Breaking News, 2019


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