USD/CAD remains within a familiar range with BoC in focus

USD/CAD has started out in early Asia between a low of 1.3314 and 1.3325 ahead of what is about to be a busy time for USD/CAD traders with the Bank of Canada around the corner. We received the stronger-than-expected Q2 increase in Gross Domestic Produce on Friday which might be a reason for the BoC to hold, however, the background detail within the report was less encouraging than the headline.

• GDP increased 3.7% (annualized) in Q2.
• Business investment declined, household spending growth was soft.
• Industry GDP details were better with solid growth in ‘non-commodity’ industries.

BoC expectations

The BoC is expected to hold considering the last six weeks of solid economic data, although the further escalations in US-China trade tensions have left some market participants looking for a rate cut. Markets are pricing in a full cut by December, with appreciable odds of a move in October - However, the BoC has been known to surprise.

"We expect the Bank to downplay recent economic strength in the face of worsening global trade tensions. Concerns over US-China relations should also be reflected in the forward looking language, where we expect subtle dovish tweaks," analysts at TD Securities explained.

USD/CAD levels

The price trades below the 200-day moving average and the resistance in the 1.33 handle and a confluence of the 23.6% Fibo where. If price resumes back to the 38.2% on a break of the 20/50-DMA, (1.3240/60), then bears will be targetting the 1.28 handle - 1.3350 is the near-term target to break still on the upside which guards the 1.34 handle and mid-June highs.