Canadian Dollar searches for further upside after BoC holds rates at 5%

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• The Canadian Dollar is on the rise on Wednesday, looking to recover lost ground.
• The BoC held rates at 5% as the markets broadly expected.
• The CAD is in the green against the Greenback on Wednesday, but still down for the week.

The Canadian Dollar (CAD) is squeezing out some gains on Wednesday after the Bank of Canada (BoC) decided to hold its benchmark interest rate at 5%, in-line with market expectations. The CAD is seeing a step up against most of the major currency blocs but still remains down against the Antipodeans.

The Bank of Canada (BoC) held rates steady for the third straight meeting in a row, leaving enough hawkish wiggle room on the table to warn that further rate hikes would follow if inflation risks increase.

Daily Digest Market Movers: Canadian Dollar stretches for more after BoC rate hold

• The Canadian Dollar is on the move against the US Dollar, looking to recover ground after getting pushed lower against the Greenback in the early week run-up to the BoC’s rate call.
• The BoC held its benchmark rate at 5% just as markets expected.
• The Canadian central bank also cooled its hawkish rhetoric, paring back statements about inflation risks and keeping the focus on easing price pressures.
• The BoC left some hawkish statements on the table, reiterating that rates can and will go higher if inflationary pressure returns.
• BoC Statement: “Governing Council wants to see further and sustained easing in core inflation, and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behaviour.”
• US ADP Employment Change figures missed the mark on Wednesday, introducing some jitters into USD-based currency pairs.
• The US ADP Employment Change for November showed 103K new jobs added to the US economy, below the forecasted upswing to 130K and falling back from October’s 106K (revised down from 113K).
• US Initial Jobless Claims for the week of November 24 will be the notable data release on Thursday before markets round the corner into Friday’s US Nonfarm Payrolls (NFP).

Technical Analysis: 

The Canadian Dollar (CAD) is marginally higher on Wednesday, only losing ground against the Aussie (AUD) and the Kiwi (NZD) for the mid-week market session. The CAD is up around a fifth of a percent against the US Dollar (USD) on the day, dragging the USD/CAD back into familiar chart territory near 1.3550.

The USD/CAD gained ground in the early week, taking the pair from opening bids near 1.3495 directly into the 200-hour Simple Moving Average (SMA) just below the 1.3600 handle. 

The Canadian Dollar is in the green for the week against everything except the safe havens. Despite the Loonie’s bid on Wednesday, the USD/CAD still remains down around half a percent from Monday’s opening bids.

USD/CAD Hourly Chart

USD/CAD Daily Chart