The Canadian dollar collapsed yesterday against the US dollar, and the USD / CAD currency pair updated its monthly highs after the Bank of Canada announced that monetary policy remained unchanged.
According to the report, the Bank of Canada left the one-day interest rate target unchanged at 1.75%, saying that the key rate should be raised to a neutral level to achieve the target inflation rate. The regulator also noted that oil prices, companies' investments and the workload of the economy will play on the formation of interest rates.
As for inflation, the bank expects a weakening of consumer prices in the coming months, while core inflation is in line with expectations, which is due to the almost complete workload of the economy.
As I noted above, oil prices remain the main problem for the regulator. The Bank of Canada is confident that the decline in oil prices reflects geopolitics and uncertainty about global economic growth, and therefore, activity in the Canadian energy sector is likely to be noticeably lower than expected.
Regarding the growth of the Canadian economy in the 3rd quarter, it is fully in line with forecasts. However, data indicate a slowdown in momentum in the 4th quarter of this year due to lower investment by companies, which is partly due to the summer trade uncertainty. This is a trade conflict between the United States, Canada, and Mexico, which resulted in a new trade agreement.
As for the technical picture of the USD / CAD currency pair, the probability of breaking through the current resistance levels around 1.3400 and 1.3460 is extremely small, and from the first time, it is unlikely that we can consolidate above the highs of July this year. Consider long positions after correction to support areas of 1.3300 and 1.3250.
Returning to the topic of oil and its collapse, yesterday, during a technical meeting, OPEC approached a decision to reduce oil production. As indicated in the minutes of the meeting, in which the allies of the cartel, led by Russia, also took part, it was decided to recommend an extension of the transaction to restrict production.
During the speech, the Minister of Oil of Oman said that the oil-producing countries only agreed on the need to reduce production and did not discuss possible figures for reducing production. The important point was that Russia supported the reduction in production.
If we talk about approximate figures, then, according to rumors, producing countries are discussing a reduction in production of at least 1 million barrels per day.
Today, the meeting of the cartel will begin, which will end tomorrow. It is expected that OPEC will agree to reduce oil production by 1.3 million barrels per day.
Today, there are also data on oil reserves in the United States.
