USDCAD will have a busy day ahead with a balance of trade figures and a Bank of Canada interest rate decision leading into a second day of testimony from Jerome Powell.
USDCAD – Daily Chart
USDCAD has found resistance at the 1.36-3650 level and will look to this week’s events for direction.
Fed Chair Powell started his testimony to Congress on Tuesday and will continue on Wednesday. Analysts do not expect Powell to stray too far from his recent hawkish stance on interest rates.
Canada will start the day with a balance of trade figures, with analysts expecting a C$-0.06BN figure compared to last month’s C$-0.16BN.
That will be followed by an interest rate decision from the Bank of Canada. Economists expect the bank to halt its recent interest rate hikes at 4.5%. Canada may have turned the corner on inflation, but the bank will likely have to wait for prices to reach its 2% target.
In its latest survey of Canada, the Organization for Economic Cooperation and Development (OECD) forecasted GDP growth of 1.3% this year and 1.5% in 2024.
“Like many economies, Canada faces the difficult challenge of tackling inflation without undermining economic activity,” said Alvaro Pereira, chief economist at the OECD.
“Fiscal and monetary policy need to work in tandem to ease inflation pressures while governments shore up public finances. Meanwhile more needs to be done to strengthen productivity through removing barriers to internal trade and competition,” Alvaro Pereira added.
On monetary policy, the OECD expects inflation to drop toward the Bank of Canada’s 2% target by the end of 2024. Friday will bring the latest US Non-Farm Payrolls jobs number, and the USDCAD should find a trend in that number. With a heavy schedule of data this week, the pair should be able to break the recent highs or provide a sell signal to go lower.
