Home > Market Recap: USD/CAD Hovers Above 1.20 One Day Ahead of Bank of Canada Decision

Market Recap: USD/CAD Hovers Above 1.20 One Day Ahead of Bank of Canada Decision

Gold bounced from dynamic support as the US dollar remains weak. USD/CAD holds above 1.20 one day ahead of the Bank of Canada’s monetary policy announcement.

The first trading day of the week passed without any significant market movements. Financial markets are in standby mode, awaiting the three main events of the week – the Bank of Canada’s interest rate decision on Wednesday, US inflation data and the European Central Bank’s decision on Thursday.

As such, the equity market indices consolidated ranges close to their recent highs. Rumours are that the Fed is already preparing to communicate a plan for tapering the asset-purchases, so the current calm in the market may come to an end sooner rather than later.

The FX market’s volatility remains subdued as well. It feels like summer trading already, despite the fact that we are only in the first half of June. The EUR/USD hovers around 1.22, looking for direction, and so does the AUD/USD, flirting with the 0.7750 area.

Gold had a strong bounce from last week’s lows, reacting from dynamic support given by a rising trendline – commodities, in general, like the weak dollar theme, especially with rising inflation.

Daily Analysis

Today’s economic calendar is full of third-tier data only. Effectively, it means that the market participants do not expect that the economic data ahead will impact the price action, as suggested by the colour yellow attributed to the events. Therefore, investors will look at other factors that might have an impact, such as the weakness in the cryptocurrency market, for example.

Markets to Watch

Gold, USD/CAD, EUR/AUD  – markets in focus today.


Gold bounced from dynamic support given by the lower edge of a rising channel. The yellow metal is in a bullish trend since April began, and it builds energy to pop above the $2,000 psychological level.


A currency pair in focus this week is the USD/CAD pair. The Bank of Canada is expected to deliver its monetary policy decision tomorrow and the USD/CAD barely holds major support at 1.20. The 1.20, as well as 1.22, have proved to be the edges of a range that is now older than one month, telling much about the volatility in the FX markets.


An interesting setting forms on the EUR/AUD cross. On the one hand, the market appears to be in the final stages of an inverse head and shoulders formation. On the other hand, the 1.60 has acted as a pivotal level many times in the past. Therefore, a move above 1.60 should trigger more strength for the pair, as the market participants will push for the inverse head and shoulders’ measured move.

Winners and Losers

The Canadian dollar remains strong against the US dollar, and so does the price of gold.

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