Daily Afternoon Report 12.07.2016
The U.S. dollar dropped against its Canadian counterpart on Tuesday, as market sentiment was boosted by expectations for fresh stimulus measures by several central banks and as rising oil prices lent particular support to the commodity-related Canadian currency.
USD/CAD hit 1.3013 during early U.S. trade, the pair’s lowest since July 8; the pair subsequently consolidated at 1.3029, retreating 0.69%.
The pair was likely to find support at 1.2984, the low of July 8 and resistance at 1.3144, the high of June 2.
Sentiment improved amid mounting expectations for a rate cut from the Bank of England at the conclusion of its policy meeting on Thursday.
BoE Governor Mark Carney said on Tuesday that a negative consequences from the Brexit vote on the U.K. economy could prompt the central bank to act, signaling that more stimulus is on the way.
Market participants were also eyeing the Bank of Japan, as Japanese Prime Minister Shinzo Abe’s win in Sunday’s parliamentary elections fed hopes for a fresh package of stimulus measures to spur economic growth.
Separately, the Canadian dollar was also boosted as oil prices moved sharply higher on Tuesday after the Organization of the Petroleum Exporting Countries said global demand for its crude production would rise in 2017 and that excess oil inventories would diminish.
The loonie was also higher against the euro, with EUR/CAD sliding 0.41% to 1.4443.