The Bank of Canada raised interest rates by 25 basis points as expected, but the rate statement that followed the interest rate decision came off as being dovish. This ended up putting pressure on the Loonie. Lower oil prices helped to drag down the Canadian Dollar, which closed the week lower against the US Dollar.
USD/CAD presently finds support at around 1.2396 while resistance is at the 1.2580 area. On the back of what happened to the Loonie last week, the expectation is for more bearishness to occur in the new week. However, the focus would be on the Core Retail Sales and CPI reports. These news releases could determine if any bearish sentiment will be reinforced or if bets on the Loonie would change to bullish ones. Bets for further rate hikes are currently dampened after comments by the Bank of Canada that the economy faced downside risk from NAFTA. NAFTA renegotiation talks continue later this month.
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