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Bank of Canada stays steady on its course

Posted on: May 25, 2016

​USDCAD took a tumble yesterday with WTI pushing higher testing the $49/bbl. It opened in the low 1.3100 area and fell to the 1.3086 level before reversing all of the move rallying back up to the 1.3166 in late afternoon. However, a very bullish API number took it down to 1.3120 area just before the close.

The focus of the day is the Bank of Canada announcement and it was widely expected to remain unchanged at 0.5%. It came in right on expectation with second quarter GDP cut by 1.25PP due to Alberta's wildfire and the statement that the Canadian Dollar is now close to level assumed in April. All in all, it was a fairly neutral statement with nothing unexpected.

EIA crude oil inventories fell 4.23 million barrels which is not as bullish as yesterday's API number. WTI fell from an early morning high of 49.62 to trade back below the 49 handle. That has given the USDCAD some support.

With both the Bank of Canada and EIA announcements out of the way. The market will be determined by flow and risk sentiment although I don't think the market will bet too heavily one way or the other until Friday when we hear from Yellen and other top tier USD data. I'm still bias long USDCAD right now with possible entry in the 1.3015/30 area targeting the 1.3170/80 area.

  • Previous Day's NA Range 1.3086 - 1.3166
  • Asia overnight range 1.3094- 1.3133
  • London overnight range 1.3086- 1.3133

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