CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Bank of Canada hikes 25bps. More to come!

March 2, 2022 7:16 PM

The Bank of Canada raised rates for the first time since October 2018 by 25bps to 0.50%.  This is in-line with most economists’ expectations; however, many market participants were hoping for a 50bps increase.  (See our Bank of Canada preview here). The BOC noted that it would continue the reinvestment phase of its balance sheet by keeping bond holdings constant.  In addition, the central bank said that it expects to increase interest rates further due to higher inflation from both energy and food-related commodities.  The Bank will use monetary policy tools to return inflation to the 2% target and keep inflation expectations well-anchored.

Guide to the Bank of Canada

On a daily timeframe, USD/CAD broke below the neckline of a head and shoulders pattern on January 11th and appeared on its way to target near 1.2250.  However, the move was halted at the 50% retracement level from the lows of June 2nd, 2021 to the highs of December 2nd, 2021, near 1.2450.  Price then bounced and, for the most part, has been trading in a range between 1.2636 and 1.2777 since then.

Source: Tradingview, Stone X

Trade USD/CAD now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

 

On a 240-minute timeframe, USD/CAD tried to break above the top of the month-long channel and failed.  Often, when price fails to move above one side of a channel, it moves to test the other side of the channel.   Support is at the bottom horizontal channel line near 1.2636.  If price breaks below, it can move  to the horizontal support and the 127.2% Fibonacci extension from the low of February 10th to the high of February 24th near 1.2570. The third level of support is at the 161.8% Fibonacci retracement level from the same timeframe and the 50% retracement level from the June 1st, 2021 low to the December 20th, 2021 high, near 1.2485.

Source: Tradingview, Stone X

Resistance is at today’s highs and the downward sloping trendline from February 24th near 1.2745. The next resistance level is the top horizontal trendline near 1.2777 and then the February 24th highs at 1.2878.

The Bank of Canada hiked rates by 25bps, as expected, and said that there is more to come!  As a result, USD/CAD has moved lower and is nearing the bottom of the long-term channel the pair has been in for the last month.  Watch the additional support below!

Learn more about forex trading opportunities.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024