USD/CAD traders are donning their whiplash collars after that pair came under very heavy selling pressure after the BOC statement this morning only to rebound as high as 1.1114 in early afternoon. USD/CAD fell to 1.0967 after the Bank kept rates steady and said
Stimulative monetary and fiscal policies, improved financial conditions, firmer commodity prices, and a rebound in business and consumer confidence are spurring domestic demand growth. However, the higher Canadian dollar, as well as ongoing restructuring in key industrial sectors, is significantly moderating the pace of overall growth.
The Bank toned down its view of CAD strength which it called “unprecedentedly rapid” in its last statement.
Traders say the selling below 1.10 was quite intense, leaving one to wonder who was soaking up all those dollars at the lows…I’m gonna go out on a limb and speculate it’s the same guy who was selling USD/CAD by the boatload in the 1.1650 region roughly two weeks ago…
USD/CAD consolidates now in the 1.1080 area with dealers skittish that a short-term bottom may be in place. Look for buying on dips to the 1.1025/30 area near-term.
Traders often view USD/CAD as the canary in the coal mine. It rolled over before the EUR/USD took off at the beginning of last week and it may be sending a signal that the dollar slide has come to an end for the near-term.