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Forex: USD/CAD surrenders some gains, eyes on upcoming BoC rate decision

FXstreet.com (Barcelona) - The USD/CAD closed 37 pips lower at 1.0203, with the greenback giving up gains across the board as buyers stepped back in to take advantage or yesterday’s declines in risk assets. All eyes are focused on the upcoming BOC Rate decision, due out on April 17th at 14:00 GMT. According to the FXStreet.com Economic Calendar, consensus is for the BoC to main its current interest rate of 1%.

From a technical perspective, the pair closed above a key downtrend line which should now act as support (1.0200-1.0170 area). According to Shaun Osborn, Chief FX Strategist at TD Securities, “The daily pattern of trade still looks more constructive for the USD. On a daily close basis (5pm ET), the push through 1.0234was sustained and the market is managing to hold on to the 40-day MA (1.0215) so far today."

He later added, "We continue to view the broader trend here as USD-bullish now. The market has corrected about 2/3 of the 0.9934/1.0341 move up, important support between 1.0080/1.01 held, the downward sloping channel from the 1.0341 high can be seen as a bull flag, implying the resumption of the broader USD rally (towards 1.06) after the move above channel resistance. We still prefer to buy dips.”

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The BOJ’s new policy would lift potential growth in the money supply—and therefore inflation—from 4.8x to 18.7x, says Richard Koo, economist at Nomura, who uses as principle for his analysis the concept of statutory reserve deposit multiples.
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