background image background image background image

Bank of Canada doubles down on dovishness

Forex 3 minutes to read
MO
Michael O’Neill

FX Trader, Loonieviews.net

Summary:  USDCAD soared to 1.3519 from 1.3440, despite a surge in WTI oil prices to $64.24/barrel because of another dovish Bank of Canada monetary policy statement in which it underscored its dovish bias by dropping any reference to future rate hikes.


The bank blamed weaker than expected global and domestic growth as well as trade uncertainty that undermined investment for the necessity to continue with an accommodative monetary policy. It also downgraded its 2019 GDP forecast from 1.7% to 1.2% which opens the door to the risk of a rate cut.

USDCAD is poised for further gains. The break of 1.3460 set the stage for a test of the 1.3520-60 resistance zone, which if broken suggest further upside to 1.3660 and then 1.3790.

The USD dollar is mixed in New York trading CAD led AUD, NZD, and EUR lower, while JPY, GBP and CHF inched higher.

Wall Street broke a couple of records yesterday. The S&P 500 and Nasdaq set new closing highs, and so did Canada’s S&P/TSX. Those markets opened flat this morning, but that may just be the calm before the surge. Traders are waiting for Facebook (FB: Nasdaq)and Microsoft (MSFT: Nasdaq) quarterly results after the close and digesting last night’s Twitter results (TWTR: Nasdaq) and this morning’s earnings report from Boeing (BA: NYSE) Twitter is down 1.9% despite better than expected results while Boeing shares rose 1.5% even though they dispensed with 2019 financial forecasts and share buybacks.

Pacific Gas and Electric (PCG: NYSE) shares surged 17.9% in pre-market trading after a Bloomberg story said that Berkshire Hathaway was in talks to buy the company. Berkshire CEO Warren Buffett denied it. He said the report is "100% not true" adding "I would know." Prices dropped but are still up 7.8% since the close.
usdcad
Chart: USDCAD daily. Source: Saxo Bank

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.