Bank of Canada doubles down on dovishness

Forex 3 minutes to read

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

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