BOC Rate Decision, usd / cad, COVID-19 is a Recession-Era Points:
- The BOC left its benchmark overnight rate at 0.25%, as expected
- COVID-19 virus of the path of dictating the pace of the economic recovery
- BOC inaugurates a new era with Tiff Macklem and take the lead
The Bank of Canada left its interest rate unchanged at 0.25% Tuesday morning. Markets awaited the passage of the BOC and a former Governor Poloz has been mentioned previously, the interest rate was as low as possible. The USD/CAD pair will be moved to the top, while the announcement of the decision of crossed wires. The Canadian Dollar has made progress in relation to the usd in recent weeks as a global risk rally continues in the midst of the immense support of the central bank, in spite of the disturbing macro-themes. The strength of the Canadian Dollar continues, on-the-back-of-the BOC move, with USD/CAD dipping below the 1.3500 mark.
USDCAD (1-Min Price Chart)
Tiff Macklem, the newly appointed Governor, took the reins of the central bank of Canada this week, but the BOC policy statement, it should not reflect the major changes in the industry, from Macklem, with its mandate being to this day. Still, market participants do not expect a fundamental change in the policy, with Macklem at the wheel. That being said, the markets will be watching Macklem to close in the following months, for clues as to what changes it will bring to the BOC.
The main factors, such as the current COVID-19 pandemic and the economic repercussions for the labour market and the economy as a whole is expected to remain the engine of political decisions, for the foreseeable future. The Virus results seem to have stabilized, however, as the general policy statement, the BOC noted that the economy avoided its most serious scenario from the April Monetary Policy Report. The fall in oil prices have also been noted in the delivery of the policy statement, with a decrease in investments in the canadian energy sector, which remains an important segment of the economy.
Brent Crude Oil Daily Price Chart)
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The technical backdrop for the Canadian Dollar appear bullish on the U.S. Dollar. The recent violations through several technical levels, see the USD/CAD will be ready for a possible drop further in the near term. However, while markets remain in a risk on the position, such as the global environment remains fragile and tensions between the united states and China, as well as the continuing protests throughout the united States and can seep into and its appetite.