The Canadian economy continues to show signs of slowing.
Business investment remains weak, unemployment has moved higher, and overall growth is hovering near stall speed
At the same time, inflation pressures have reemerged, driven largely by higher energy prices and trade-related costs. Against that backdrop, the Bank of Canada has adopted a wait-and-see approach, keeping its policy rate at 2.25% as policymakers assess whether slowing growth or persistent inflation will prove to be the greater challenge in the months ahead. Comments from Prime Minister Mark Carney today reinforced that view, noting that economic data are likely to remain uneven and that investment trends continue to be choppy.
From a technical perspective, the USDCAD declined from late March into early May before staging a recovery through May and into the start of June. Sellers regained some control late last week as the pair corrected lower, but downside momentum faded after support buyers stepped in near a key swing area between 1.3765 and 1.3778. During that decline, the pair fell below a cluster of important moving averages, including the 100-hour moving average, the 200-hour moving average, and the 200-day moving average.