Briefly –
- USD/CAD has retained a massive bearish bias.
- The pair declined beneath its lowest mark since 22 April.
- USD/CAD will likely keep falling ahead of the Bank of Canada decision.
USD/CAD plummeted to explore levels not seen since 22 April as it awaits the upcoming rates decision by the Bank of Canada. While publishing this blog, the pair traded at 1.2655, around 3.26% beneath May’s highest mark.
BOC Rate Decision
The Bank of Canada (BOC) will end its 2-day conference on Wednesday and reveal its decision on interest rates. Financial experts expect the bank to increase the rates by 0.50%. Such a move would mean the 3rd time the bank hiked rates in 2022.
BOC initially introduced a 0.25% interest rate hike during the March meeting before similar actions in April.
The bank targets to curb the amplifying inflation. The latest economic data shows Canada’s inflation increased in April, hitting 6.8%. That had it exploring the highest mark since January 1991.
The current surge emerged as the country’s energy costs stayed higher during the month. Also, food prices remained higher, confirming likely broad-based inflation.
The Bank of Canada isn’t the only leading central bank increasing interest rates. The United States Fed has already hiked interest rates by 0.75% in 2022 and hinted at more hikes in the next meetings.
Also, the bank of England (BOE) has executed four rate upticks, whereas the European Central Bank awaits similar moves this year.
The decision emerges one day after the latest GDP figures. The Canadian stats agency published the numbers. According to the data, the nation’s economy saw an 8.1% surge in Q1, translating to a 2.89% YoY increase.
These figures show the Canadian economy on slow recoveries. Another catalyst for USD/CAD will be the United States’ non-farm payroll stats. Analysts expect these numbers to indicate slowed hiring in May.
USD/CAD Prediction
According to the 4-hour chart, USD/CAD maintained massive bearishness within the past couple of days. The pair dropped under the 1.2903 crucial area, the level that represented the highest mark on 8 March. Moreover, it dipped under the head-shoulders setup’s neckline.
Furthermore, USD-CAD moved under the 25- and 50-day MA, whereas the Moving Average Convergence swayed beneath the neutral line. The pair might keep plunging as it awaits the BOC’s upcoming decision.