USD/CAD had been on a downward trend in the past three days following a weaker US dollar and a firmer Canadian dollar. This had taken the pair to as low as 1.28288 yesterday. However, the pair seems to have found support in this region and is currently revising its downward movement. This could be attributed to a reviving US dollar strength in the market.
Nevertheless, there are several factors affecting the USDCAD from the economic calendar today which will determine if the current reversal will be sustained. The BoC is expected to deliver a speech on its Bank rate statement and overnight rates. Also, events from the US zone will likewise affect this pair too. We have discussed further the impact of these economic activities on the USDCAD below.
Major factors to affect the USDCAD from the Economic calendar today
BOC Rate Statement
The Bank of Canada (BoC) Rate Statement is the major tool used by the policymaking committee to reveal to investors their line of action regarding the monetary policy. It shows the outcome of their decisions: on the interest rate to adopt, and further states their reasons for taking such decisions. Further increase in the interest rate by the committee would be a positive sign for the Canadian dollar. This might lead to further downside in USDCAD. There are high expectations that the BoC will further raise its benchmark interest rate by half a percentage point today to further contain the rising inflation which is currently at its highest in thirty years.
The overnight rate also known as the policy interest rate is the interbank borrowing and lending rate in the overnight market. This rate is used by the central banks to control the monetary policy. This rate is usually lower than the general rate given to individuals. An increase in the overnight rate will signal a possible increase in the general interest rate too. BoC had increased its target for the overnight rate to 1% during their last session in April, while the Bank Rate for individuals was given as 1.25%. The deposit rate was slated at 1%. An increase in the overnight rate will be a bullish signal for the Canadian dollar which means a decline in USDCAD.