THE USDCAD MAY CORRECT UPWARDS
The Bank of Canada increased the interest rate from 0.5% to 0.75%, a move that shows confidence in steady economic expansion for the country. This decision was highly anticipated and we may see the start of an upward correction that will confirm the rule “buy on rumor, sell on fact”.
In this case the closest targets will be at 1.2800 and 1.2900 after which overcoming we may see price growth to the psychologically important mark of 1.3000. In case of further decline, the immediate objective will be at 1.2665. Additional stimulus for the price growth of the pair may come from the fall of crude oil quotations. Today a spike of volatility is expected after the release of the consumer price index in the US at 12:30 GMT.
Accelerating the pace of inflation growth will lead to the increased possibility of another rate hike by the Fed in 2017. The focus will also remain on Janet Yellen’s speech in Congress. Yesterday Mrs. Yellen stressed the intention to start reducing the Fed’s balance sheet till the end of the current year in case of consistent economic expansion in the US, strong labor data and inflation growth towards the target level of 2.0%.