USD/CAD whipsaws after BoC holds rates steady, keeping a hawkish tone

USD/CAD reacted with volatility, hitting a daily high of 1.3676 after the Bank of Canada kept rates unchanged but maintained a hawkish stance on inflation.
Despite a -0.2% annual contraction in Canada’s Q2 GDP, the BoC expresses concerns about the “persistence of underlying inflationary pressures.”
Technical outlook suggests further upside if the pair reclaims its daily high; downside support lies at the 200-HSMA at 1.3584 and the week’s low of 1.3575.

Christian Borjon Valencia FXStreet

The USD/CAD trades volatile earlier in the North American session after the Bank of Canada (BoC) decided to hold rates unchanged at 5%, though it maintained a hawkish tone in its monetary policy statement. At the time of writing, the major trades in a wide 1.3620/70 range.

Bank of Canada holds rates unchanged at 5.00%; USD/CAD remains steady

Given that last week’s Canadian Gross Domestic Product (GDP) shrank annually by -0.2% in Q2, triggering market participants’ expectations, the BoC would keep rates unchanged.

In its statement, the BoC Governing Council said that excess demand is cooling. Still, they kept their options open, as they remain concerned about “the persistence of underlying inflationary pressures,” as mentioned in the monetary policy statement.

The BoC added that measures of core inflation remain high, with major global central banks focused on restoring price stability. BoC policymakers added the economy entered a period of weaker growth, which is needed to alleviate price pressures.

USD/CAD Reaction to the BoC’s decision

The USD/CAD reacted to the upside, reaching a daily high of around 1.3676 before retreating somewhat towards the 50-hour Simple Moving Average (SMA) at 1.3627. Further upside is seen if the major reclaims the daily high, which could pave the way towards 1.3700. On the flip side, if the USD/CAD dives below the 50-HSMA, the next support emerges at the 200-HSMA at 1.3584 before testing the current week’s low of 1.3575.

USD/CAD Price Action – Hourly chart

USD/CAD

Overview
Today last price	1.3629
Today Daily Change	-0.0013
Today Daily Change %	-0.10
Today daily open	1.3642

Trends
Daily SMA20	1.3536
Daily SMA50	1.3364
Daily SMA100	1.34
Daily SMA200	1.3464

Levels
Previous Daily High	1.367
Previous Daily Low	1.3589
Previous Weekly High	1.3637
Previous Weekly Low	1.3489
Previous Monthly High	1.364
Previous Monthly Low	1.3184
Daily Fibonacci 38.2%	1.3639
Daily Fibonacci 61.8%	1.362
Daily Pivot Point S1	1.3597
Daily Pivot Point S2	1.3553
Daily Pivot Point S3	1.3516
Daily Pivot Point R1	1.3678
Daily Pivot Point R2	1.3714
Daily Pivot Point R3	1.3758

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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