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CAD dips ahead of Bank of Canada rate decision

CAD - Canadian Dollar

Demand for the Canadian dollar dipped slightly against the US dollar this morning as oil prices edged lower. Investors are also waiting for a Bank of Canada interest rate decision later in the week. USDCAD was up 0.11%, trading at 1.2084 at the time of writing.

Analysts expect the Bank of Canada to leave its benchmark interest rate on hold at 0.25%. In April, the central bank indicated that it could start raising interest rates in 2022.

With Canada being a major producer of commodities like copper and oil, some analysts say the currency could remain well-supported in the next year as the recovery around the globe unfolds. A huge infrastructure spending plan proposed by the US government could also be a strong tailwind for CAD.

Key Movers

On Thursday, the European Central Bank will be holding its latest monetary policy meeting, setting interest rates and discussing whether to prolong their elevated pace of emergency bond-buying program. EURUSD was up 0.06% this morning, trading at 1.2170 at the time of writing.

GBPUSD was up 0.17%, trading at 1.4179 at the time of writing. The pound could see a selloff if the UK government decides to deviate from its plan to fully lift COVID-19 restrictions on June 21. In the recent weeks, some scientists have advocated for pushing back the reopening date due to rising delta variant cases. Some analysts think extending the working from home advice will mean less consumer spending, which would stunt the UK’s economic recovery.

Australian job ads increased for a straight 12th month in May, climbing to its highest since 2008. Total jobs ads jumped 7.9% in May from April at 4.9%, according to Australia and New Zealand Banking Group. AUDUSD was up 0.32%, trading at 0.7761 at the time of writing.

The US dollar recovered slightly after dropping on Friday following softer than expected jobs numbers. The US Dollar Index was trading at 90.04 at the time of writing. This week, investors will be closely watching for a well-known indicator of inflation, the U.S. Consumer Price Index (CPI) report, which is due on Thursday.

Expected Ranges

EUR/CAD: 1.468 - 1.471 ▲

GBP/CAD: 1.707 - 1.713 ▲

AUD/CAD: 0.934 - 0.938 ▲

USD/CAD: 1.206 - 1.210 ▲