Canada will announce its monthly GDP on July 31, at 15:30 MT time.
The Bank of Canada meeting: results
Canadian central bank left the Overnight Rate unchanged at 1.5%.
In its statement, the Bank of Canada claimed that:
- The recent economic data are in line with the forecasts.
- Canadian GDP growth will slow down temporarily in the third quarter, mainly because of fluctuations in energy production and exports.
- Although CPI inflation was at 3% in July, it should move back towards the target of 2% at the beginning of the next year.
- Trade tensions represent a key risk and are affecting some commodity prices.
- Financial stresses have intensified in some emerging markets but are not spreading.
- The central bank is closely monitoring NAFTA negotiations.
- Higher interest rates will be necessary to achieve the inflation target. The Bank of Canada will act gradually, depending on the economic data.
So, there nothing to contradict a rate hike in October, but at the same time, there’s no blunt statement that the increase will happen.
USD/CAD keeps trying to stick above the resistance at 1.3180. The statement of the BOC couldn’t support the Canadian dollar to pull the pair down. If the pair is able to close above 1.3180, there will be odds of the further rise. The next resistance is at 1.3219. However, if there is a progress in the NAFTA deal, the CAD will be able to fight with the USD. The support lies at 1.31.
On the daily chart of CAD/JPY, 50-day and 100-day MAs don’t let the pair go up. Moreover, the JPY is stronger against the CAD because of the risk-off sentiment of the market. Traders worry about the NAFTA uncertainties. As a result, there are risks of the pair’s fall. Supports are at 84.35 and 83.58. If there is a progress in the deal today, the pair will stick above 84.35. The resistance is at 84.85.
GBP/CAD has significantly risen on the optimistic Brexit news. The pair has already tested above the 50-day MA and the resistance at 1.7058. If the pair closes above the resistance, the further rise is anticipated. The next resistance is at 1.7217. In case of the progress in the NAFTA talks, the pair may weaken. The support is at 1.6890.
The US NFP will be published on August 7 at 15:30 MT time.
The market sentiment is indeed risk-on today. Stocks, riskier currencies and gold are rising amid the waning US dollar.
Follow the BOE monetary policy and rate statements on August 6 at 14:00 MT time…