The US dollar rose slightly against the Canadian dollar on Tuesday, as we await the Bank of Canada interest rate decision coming out today. It is anticipated that the BOC will raise rates, and if they don’t, that will be very negative for the Canadian dollar, thereby sending this market much higher. That being the case, I think there is a bit of an upside surprise just waiting to happen. However, if we do get the interest rate hikes are coming out of Ottawa, then the question will be whether they are hawkish when it comes to the press conference. If they are not, this could be a “one and done” scenario, and it’s possible that the US dollar could rally after that, as the oil markets get the vital Crude Oil Inventories announcement today, and that of course can have a massive effect on the CAD.
Selling rallies? Maybe.
I think if we can stay below the 1.30 level, and you probably still should look at this as a market that could be a “sell the rallies” type of situation. We need to see some type of exhaustive candle, as that would be a nice selling opportunity. If we break above the 1.30 level though, it’s likely that we could continue to go higher. I believe that this is going to be very important today, as we need to discern what the market feels that the Federal Reserve and the Bank of Canada are getting ready to do. If we do breakout to the upside though, I expect that the 1.32 level will be massively resistive. Oil markets may influence this market as well, as we get the inventory announcement, so I think the one thing that we can get out of this market is that it’s going to be volatile.
Written by FX Empire