Global macro overview for 13/06/2017:
Bank of Canada Senior Deputy Governor Carolyn Wilkins said on Monday that the BoC might discuss whether monetary policy stimulus was still required. According to Wilkins, due to the fact that the economy showed impressive growth, if only a few sectors expand enough to absorb excess capacity, the BoC would need to take appropriate action to meet the inflation target. Moreover, she also said, that Canada, being one of the biggest exporters of oil, managed to adapt to low oil prices and the BoC is encouraged by signs that sources of growth in the economy are broadening. In conclusion, the Bank of Canada's view has been very optimistic lately, but those comments from Wilkins are the most hawkish comments in a long time. It is very possible, that at the next BoC meeting, that is scheduled for July 12, the policymakers might start to follow the Willinks' optimistic point of view and adopt a tightening stance. Nevertheless, the possibility of an immediate rate hike at the next BoC meeting is still rather low and more probable time for a rate hike seems to be at the year end or at the beginning of 2018.
After the comments hit the newswires, the Canadian Dollar strengthened immediately across the board, but it is possible that the market overreacted and just before the FED interest rate decision all the appreciation of the CAD might be erased, especially on the USD-related currency pairs. Nevertheless, in the longer term, the bias might be switched to bullish for CAD.
Let's now take a look at the USD/CAD technical picture on the H4 time frame. The price is trading close to the technical support at the level of 1.3222, just above the old golden trend line support. The market conditions are oversold and the next resistance is seen at the level of 1.3387.
