The Bank of Canada (BOC) published their monetary policy report on Wednesday. They expect
The bank predicts domestic demand will be the driving factor of economic growth over the foreseeable future partly due to increased household spending. As well, strengthened business investment is expected to continue strong. The bank elected to continue the benchmark lending rate at 1.0% on Tuesday and forecasts inflation will be around 2.0% over the balance of the projected horizon. The three largest factors that could impose higher inflation include higher-than-expected oil prices, stronger-than-expected US expansion, and an increased pace in Canadian household spending.
The USDCAD consolidated today after the 100 pip drop yesterday after the rate announcement. While markets favor Canadian Dollar bulls, the momentum was not strong enough for the USDCAD to break to stay below current support at 0.9893. The Canadian dollar benefits from rise in prices of Oil and we expect the pair to trade in a range between 0.9893 – 1.0001 as long as Oil stays below $110 a barrel.
Eugene Ross, Analyst
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