The Canadian Dollar (CAD) is holding steady ahead of the Bank of Canada policy decision, with expectations of a 25bps rate cut to 4.25%. The policy statement and press conference today will provide insights into the central bank’s future monetary policy actions, according to Scotiabank’s Chief FX Strategist Shaun Osborne.
Potential for USD/CAD to Rise Above 1.3575
Market participants anticipate dovish comments from policymakers, as the easing cycle is expected to continue. This sentiment could keep the CAD under pressure, with potential for further upside in the USD. Governor Macklem’s upcoming speeches in September add to the market uncertainty.
USD/CAD’s fair value is estimated at 1.3616, suggesting a slight bullish bias for the USD. Short-term momentum favors the USD, with a push above 1.3575 resistance opening the door for further gains towards 1.3635 and potentially beyond. Support is seen at 1.3515/20.
Analysis and Outlook
Overall, the Bank of Canada’s decision today could have a significant impact on the CAD and USD/CAD pair. Dovish comments are likely to weigh on the CAD, potentially pushing USD/CAD higher. Traders should keep a close eye on key levels such as 1.3575 and 1.3616 for potential trading opportunities.