Today, the Bank of Canada (BoC) has kept its benchmark interest rate at one percent, which matched the general consensus. The central bank said low inflation still remained a large concern, even though consumer prices have ticked higher recently.
The BoC said in a statement, “weighing recent higher inflation readings against slightly increased risks to economic growth leaves the downside to the inflation outlook as important as before. At the same time, the risk associated with household imbalances remain elevated.” There is still concern about global growth and lack of economic momentum in the United States, Canada’s largest trading partner.
The central bank forecasts the inflation rate at two percent as temporary, largely due to energy prices and exchange rate movement. However, the core inflation remained well below two percent.
The dollar gains on the loonie for three consecutive sessions, after price action found support at the 61.8 percent Fibonnaci retracement from the multi-year high of 1.2777.
Resistance is found at the convergence of the 50 and 72 EMA near 1.0935. A close above this dynamic resistance, the pair will trend to 1.0990 price resistance prior to testing 1.1033.
However, if the EMA resistance holds, the loonie could see some strength against the dollar. Support can be found at 1.0895 prior to resting that 61.8 percent Fib. level.