Loonie slides as BOC leaves interest rates unchanged
The Canadian dollar declined against the USD in spite of the hawkish statement from the Bank of Canada. The bank left interest rates unchanged at the 1.75% level for the fifth time in a row. In the statement, the governor said there was no need for the bank to move rates any time soon. He also said that when the bank finally changes rates, it will likely raise them. With his hawkish statement, Stephen Poloz became one of the world’s most upbeat Fed chairs. The statement said:
Overall, recent data have reinforced the Governing Council’s view that the slowdown in late 2018 and early 2019 was temporary, although global trade risks have increased. In this context, the degree of accommodation being provided by the current policy interest rate remains appropriate. In taking future policy decisions, the Governing Council will remain data dependent and especially attentive to developments in household spending, oil markets, and the global trade environment.
The kiwi rose slightly after the country released mixed data. In April, the building consents declined by a MoM rate of 7.9%. This was worse than the expected 1.3% gain. The building approvals sank by -4.7%, which was lower than the expected gain of 0.1%. The building capital expenditure declined by -2.8% while the private house approvals declined by -2.8%. The country also released the annual budget, which was titled, ‘world-first well-being budget.’ The budget was designed to address the increasing disparity between the have and the have nots. Most of the funds will be spent on mental health, child well-being and measures to combat family violence.
The price of crude oil rose in overnight trading after the American Petroleum Institute (API) released inventory data. The number showed that crude supplies declined by 5.3 million barrels over the past week. This was a steeper contraction than the 2.4 million barrels released a week ago. Today, investors expect data from EIA to show a contraction of more than 857K. Meanwhile, gasoline stockpiles increased by 2.7 million barrels while distillates declined by 2.1 million barrels.
The XBR/USD pair rose slightly after API released inventory data. The XBR/USD pair is trading at the 67.89 level, which is higher than yesterday’s low of 66.57. On the hourly chart below, the price is along the 50-day and 25-day moving averages. The dots of the Parabolic SAR are on the lower side while the pair appears to have formed a minor double bottom yesterday. The pair will likely remain unchanged as traders wait for inventory data from the US.
After several days of consecutive declines, the EUR/USD pair paused in overnight trading. The pair is now trading at the 1.1137 level, which is slightly higher than yesterday’s low of 1.1125. On the hourly chart, the price is along the lower line of the Bollinger Bands while the RSI has emerged from the oversold territory of 30. The accumulation and distribution indicator has flattened. With no major economic data expected today, it is likely that the EUR/USD pair will continue to consolidate along these levels.
The USD/CAD pair rose yesterday after the Bank of Canada (BOC) delivered its monetary policy decision. The pair reached a high of 1.3546, which was the highest level since January 4. On the four-hour chart, the price is above the 25-day and 50-day moving averages. The RSI has climbed to almost the overbought level of 70 while the signal line of the MACD continues to soar. The price will likely test the important resistance level of 1.3600.