The US Dollar finished with modest gains versus its northern neighbour’s currency, the Loonie. Thanks for Bank of Canada Governor Stephen Poloz’s comments following the Canadian central bank’s decision to slash its Overnight Cash rate by 0.5%. Poloz said that the BOC is ready to cut rates further. He added that the BOC was leaning toward a rate cut even without the coronavirus.
Canadian 10-year bond yields were down 9 basis points to 0.86%, matching the extent of the drop in the key US 10-year rate.
The Bank of Canada will try and keep up with the US Fed in trimming interest rates. However Canadian 10-year rates at already lower. That prevents them from slashing aggressively. This will cap any USD/CAD gains. Canada sees its Employment report released today. The Canadian economy is forecast to have created 11,000 jobs in February from January’s 34,500. The Jobless rate is expected to climb to 5.6% from 5.5%. Anything better than the expected numbers above will see the Canadian Loonie catch up with the US Dollar downtrend. Specially if the US Jobs number is unable to save the Greenback. Interesting times, “lets get ready to rumble.”
USD/CAD traded to an overnight high at 1.3438, closing at 1.3430 in New York before slipping in early Sydney to 1.3407. USD/CAD has immediate resistance at 1.3450 followed by 1.3480. Immediate support can be found at 1.3380 (overnight low traded was 1.33829). The next support level lies at 1.3320. Look for consolidation within a likely 1.3370-1.3430 range today. Prefer to sell USD/CAD rallies, a break of 1.3350 could see 1.3250.