TORONTO, Can. – The Canadian dollar (CAD) strengthens against the US dollar yesterday over the statement from the Bank of Canada (BoC) Governor Poloz, pouring cold water on the expectations about the rate cuts in the market.
With the recent economic situation that has been largely caused by the ongoing tensions in the global trade market, the monetary status in Canada is “just right,” according to the BoC governor.
In the statement made by the BoC governor, he said that he is beginning to see a spark of response in terms of easing in global market conditions.
According to analysts, the comments from Poloz were strong at best, also noting that they tend to incline the market for the BoC remaining on hold for a much longer period.
Also, the optimistic gains in CAD values were powered up by the help of rising oil prices yesterday, allowing it to maintain the increase. Further, it is expected to zoom in as Canada releases its retail sales growth data for September, noting that the oil market will also largely affect the direction of CAD’s growth.
On the other hand, during the American trading session yesterday, the US/CAD pair has dropped considerably. The pair is going further from the R1 (1.3335) resistance line, and moving on a tight range afterward. Despite the current tight range bound motion of the CAD, it is expected to have increased volatility once the retail sales growth numbers for September comes out.
CAD can possibly beat the S1 (1.3230) support line if bearish sentiments win, but if the bulls take over the pair’s direction, the CAD is looking to break the R1 (1.3335) resistance level and going for the R2 (1.3430) resistance line.
On the other hand, the US dollar (USD) strengthens despite the optimistic hopes of trade agreement starts to fade away due to conflicting sentiments from both the US and Chinese government. The USD increased over both the Australian dollar and Japanese yen as China invited the US for face-to-face trade talks in Beijing and Washington’s possibility of signing the Hong Kong bill, which previously infuriated China.
The USD/JPY pair remained in a sideways motion between the RR1 (109.00) resistance line and the S1(108.35) support line, and is expected to maintain the same course as headlines over the US-Sino deal remains fairly quiet.
The US market still awaits Canada’s retail sales growth numbers for September as well as the Preliminary PMI’s of the US for November.