The greenback refused to be capped below the parity with the Canadian dollar after dovish assessment has been released out from BOC after its decision to keep the interest rate unchanged as it is at 1% since September 2010.
The report has indicated that the bank is underpinning the household spending which is struggling suggesting keeping the interest rate at this low level for a longer than expected period.
As the market has seen previously in the data which came out from Canada substantial improving by rising of the net added jobs last month by 39.8k for the fifth consecutive month of net adding with falling of the unemployment in December to 7.2% while the market was waiting for it to stand at 7.8%.
But what is encouraging BOC to adopt this stance is considerable easing of the inflation upside risks in Canada as what has been seen by the falling of its CPI to 0.8% y/y last November which is slowest rate of rising since October 2009 giving space to BOC to keep a accommodative policy longer.
USDCAD has broken 200 moving average over the daily chart after the data after it had previously broken it over the 4 hours chart last week after the announcement of the US petroleum institute which has shown rising of the US inventory of the crude oil to the highest level in 31 years last year by rising by 13.8% last year only while its consuming has eased back to the lowest in 16 years falling by 2.1% yearly. The US imports of the crude oil have fallen too to the lowest level in 15 years falling by 6.9% yearly. These data suggest falling of the US demand of oil from Canada which exports mainly petroleum protects to it.
God willing, USDCAD can meet now in the case of rising further resisting level at 1.0055 whereas it has formed its recent top on 16th last November and it is also the highest rate of it since rising from its bottom at 0.9632 on 14th of last September while getting back down can be met by supporting levels at 0.9902, 0.9886 before 0.9814 which is still the bottom of this year and it has been formed on 11th of this month and its falling can be followed by 0.9762, 0.7933 before meeting 0.9632 again.
FX Market Strategist
Walid Salah El Din
Mob: +20 12 2465 9143