The US dollar is prolonging its momentum vs. its Canadian counterpart on Tuesday, pushing USD/CAD beyond the 1.2600 handle.
USD/CAD firmer on BoC
The sharp sell off in the crude oil (down almost 5% around $50.00/bbl) coupled with the dovish tone by BoC Wilkins is heavily weighing on the CAD, giving away initial gains vs. the USD and boosting spot back above the 1.2600 mark.
Wilkins stressed the central bank has the instruments to push inflation back to target, adding that the economy is navigating below its potential level. He also noted the negative effects of the lower crude oil prices and that there still is an important slack in the labour market. He also expects that capital investment in the oil and gas sectors could be reduced around 30% in the current year.
There are no relevant releases in Canada for the rest of the week, whereas Retail Sales, the Reuters Michigan index, Initial Claims and Fedspeak will be in the spotlight in the US docket.
USD/CAD levels to consider
At the moment the pair is gaining 1.20% at 1.2616 with the next resistance at 1.2700 (psychological level) ahead of 1.2772 (high Feb.2) and finally 1.2799 (2015 high Jan.30). On the other hand, a breach of 1.2428 (low Feb.9) would open the door to 1.2394 (low Feb.5) followed by 1.2390 (low Feb.4).
USD/CAD firmer on BoC
The sharp sell off in the crude oil (down almost 5% around $50.00/bbl) coupled with the dovish tone by BoC Wilkins is heavily weighing on the CAD, giving away initial gains vs. the USD and boosting spot back above the 1.2600 mark.
Wilkins stressed the central bank has the instruments to push inflation back to target, adding that the economy is navigating below its potential level. He also noted the negative effects of the lower crude oil prices and that there still is an important slack in the labour market. He also expects that capital investment in the oil and gas sectors could be reduced around 30% in the current year.
There are no relevant releases in Canada for the rest of the week, whereas Retail Sales, the Reuters Michigan index, Initial Claims and Fedspeak will be in the spotlight in the US docket.
USD/CAD levels to consider
At the moment the pair is gaining 1.20% at 1.2616 with the next resistance at 1.2700 (psychological level) ahead of 1.2772 (high Feb.2) and finally 1.2799 (2015 high Jan.30). On the other hand, a breach of 1.2428 (low Feb.9) would open the door to 1.2394 (low Feb.5) followed by 1.2390 (low Feb.4).
