The Canadian dollar fell to six-year lows on Wednesday after the Bank of Canada cut its overnight rate and lowered its growth forecast for this year, largely due to a weaker outlook for business investment in the energy sector.
The bank said global growth faltered in early 2015, principally in the U.S. and China. Slowing growth in China had pulled down commodity export prices, which are important to Canada’s economy.
Global economic growth is expected to strengthen in the second half of this year the bank said, but it revised down its estimate for Canadian economic growth from its April rate statement.
The bank said it now projected gross domestic product to have contracted modestly in the first half of the year, adding to downward pressure on inflation.
Canada’s economy is now expected to expand by just over 1% in 2015, down from 1.9% in April.
The loonie, as the Canadian dollar is also known, had weakened against the greenback earlier after Federal Reserve Chair Janet Yellen reiterated that the bank is on track to raise interest rates later this year if the economy continues to evolve as expected.
Intra-day bias remains bullish as 21 and 55 EMA crosses upward on 1 hour, 4 hours, Daily, Weekly and Monthly time-frame signalling a strong rise is about to emanate as price broke 1.2833 resistance (the highest since 2010).
SSRC oscillator is also showing buying momentum is still intact and am expecting further rise to 1.2983 in the medium term picture.