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Canadian Dollar Edges Higher Against USD Ahead of Bank of Canada Decision

Published 2023-10-23, 06:15 p/m
© Reuters.
USD/CAD
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By ketki Saxena

Invsting.com -- The Canadian dollar edged higher against the greenback today, as the US dollar faced a broad based decline against a basket of major currencies. 

The dollar was pressured by retreating US Treasury yields, after the 10 year yield went higher than 5%, for the first time since 2007. 

However, the loonie’s gains were limited amidst falling oil prices as diplomatic efforts in the Middle East progressed, and ahead of a monetary policy decision from the Bank of Canada on Wednesday. 

The BoC is widely expected to keep interest rates on hold at 5% at its meeting, however, the language around the decision will be parsed by CAD traders. 

"A hawkish hold could see the CAD capitalise," notes Daragh Maher, Head of Research for the Americas at HSBC.

"Recent comments by Governor Tiff Macklem and Deputy Governor Sharon Kozicki, indicate a willingness to raise the policy rate if needed until conditions are in place to bring inflation all the way back to 2%. The question is whether the BoC’s language makes this seem more likely than the market is currently priced for.”

On a technical level for the pair, analysts at FX Street note that “near-term technical support sits at the 50-day Simple Moving Average (SMA), which is currently rising into 1.3600, while the ceiling sits at the last swing high into 1.3785.”

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