USD/CAD: on the eve of the Bank of Canada meeting and after
The increase in the interest rate is a positive factor for the Canadian dollar, which also receives support from the continuing growth of oil prices. Canada, as you know, is the largest exporter of oil and petroleum products, ranking 4th in the world in terms of oil production. At the same time, the share of mineral fuels and oil products is approximately 22% in the total export of the country.
Recall that the decision of the Bank of Canada on the interest rate will be published at 14:00 (GMT). See also "The most important economic events of the week 05/30/2022 - 06/05/2022". In an accompanying statement, Bank of Canada executives will explain the decision and will likely signal the bank's future plans. The tough tone of the accompanying statement regarding rising inflation and prospects for further tightening of monetary policy will cause the strengthening of the Canadian dollar. If the Bank of Canada signals a pause or the need for loose monetary policy, the Canadian currency will fall.
At the time of writing this article, USD/CAD is trading near 1.2640, close to today's opening price. Probably, until the publication of the decision of the Bank of Canada on the interest rate, the USD/CAD pair will remain in the range near the current level. The price has 100 pips to go to the key long-term support level at 1.2540, which separates the long-term bull market from the bear market (for details, see "USD/CAD: technical analysis and trading recommendations for 06/01/2022"). Considering the average daily volatility of the pair is 100-130 points, the price can go this way within one day - for more details, see "USD/CAD: currency pair (characteristics, recommendations").
Support levels: 1.2628, 1.2600, 1.2540, 1.2460, 1.2400, 1.2290, 1.2165, 1.2010, 1.2000
Resistance levels: 1.2685, 1.2745, 1.2774, 1.2800, 1.2845, 1.2888, 1.2900, 1.2960, 1.3000, 1.3070, 1.3100
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Source: InstaForex
