The market participants will keenly monitor the BoC policy meeting next week. They will also receive data from the US, including GDP and durable goods orders. Notably, a Reuters poll of economists suggests that the Bank of Canada will maintain its interest rates at 5.00% for at least six months.
The USD/CAD weekly forecast reveals a bullish mood among investors. They are confident that the Bank of Canada will keep its rates unchanged, despite the rising inflation and economic recovery. This means that the Canadian dollar will remain under pressure, while the US dollar will enjoy the support of the Fed’s tapering plans and strong growth prospects.
Ups and downs of USD/CAD
USD/CAD ended the week slightly higher as the Canadian dollar weakened against the dollar. Notably, a decline in Canada’s retail sales led to the weakening of the Canadian dollar. It solidified expectations that the Bank of Canada will maintain its current interest rates next week.
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Moreover, the economy is exhibiting strain from 475 basis points in rate hikes since early 2022, motivating policymakers to adopt a wait-and-see approach.
USD/CAD weekly technical forecast: Bullish bias prevails.
Additionally, the Canadian dollar weakened as oil prices settled lower. This decline followed the release of two US hostages by the Islamist group Hamas in Gaza. Consequently, there is hope that the Israeli-Palestinian crisis might de-escalate without spreading and disrupting oil supplies.
Next week’s key events for USD/CAD
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