The Canadian dollar resumed a down trend after the Bank of Canada left its benchmark interest rate decision unchanged at 0.50%. Investors had anticipated earlier this week for a rate cut of 25 bps to 0.25% with the on-going crash in oil price.
However it seems that policy makers are not ready to weaken the Canadian dollar more as it is already over-bought in the market which shows on the daily chart. The currency pair topped out at 1.4688 forming a new high resistance with a hammer price action which shows a down-trend reversal might be in play.
Initial bias is mildly on the downside this week for more pull back. But downside, of retreat should be contained by 1.3815/4000 support zone and bring rebound. At this point, we’d expect some more consolidated trading below 1.4689 in near term before up trend resumption.
Later this week, investors would be taking a close look at the Canadian GDP m/m, Crude Oil Inventories, USD FOMC Statement and Advance GDP q/q.