BoC Ends 2019 With 0 Rate Cut

The Bank of Canada (BoC) kept its overnight rate unchanged at 1.75% yesterday.

The BoC expressed optimism about the global economy in the interest rate statement, saying that “there is nascent evidence that the global economy is stabilizing, with growth still expected to edge higher over the next couple of years”. The BoC also highlighted that inflation in Canada has been “consistent with an economy operating near capacity”. The hawkish rate statement sent USD/CAD plunging around 80pips, testing the support level of 1.31800.

The Canadian jobs report is due to release later at 2130 (SGT). Although unemployment rate is forecasted to remain at 5.5%, analysts are expecting that the Canadian job market added 10,000 jobs last month. A positive jobs report may send USD/CAD downwards, breaking the support level of 1.31800 that it is currently residing at. However, the U.S. jobs report will also be released at the same time and it is forecasted that the U.S. job market performed positively in November, making the trading of USD/CAD a little tricky. Nonetheless, with the recent increase in trade tension between the U.S. and China, a positive U.S. jobs report may not have a major positive impact on the U.S. dollar unless the released data are way beyond the forecasted figures.

Thus, with the positive outlook of the Canadian economy and the pessimism in the U.S.-China trade war, the downside of USD/CAD is high. Wait for the release of the jobs report from both countries before looking for selling opportunities of USD/CAD.