Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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USDCAD reverses at 1.28288. All eyes on release of Bank Rate Statement & Overnight Rate report

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.

Overnight Rate

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.

Last Updated: 01/06/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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