NEWS / Foreign Exchange

Daily FX Commentary

CAD anticipates firm Bank stance

The Canadian dollar held firm on Monday with a further test of resistance close to 1.1220 against the US dollar and the Canadian dollar was holding firm in early Europe on Tuesday with a subsequent test of US dollar support below 1.12.

The Bank of Canada interest rate decision will be important on Tuesday. The currency will jump stronger if rates are increased, although it is more likely that rates will be left unchanged. If so, the policy statement will be watched closely and hints over an increase within the next 2-3 months would support the currency. There will, however, still be pressure for a correction after recent gains with tough resistance likely close to the 1.12 level unless interest rates are increased today.