USD/CAD Rallies on Positive US ISM Manufacturing Data and BoC Announcement

The USD/CAD currency pair rallied higher today after the Bank of Canada today announced that it would be maintaining interest rates at the same level. The currency pair’s rally was also largely triggered by the greenback’s solid performance after the release of the US ISM Manufacturing PMI data, which beat expectations.

The currency pair had gained over 50 points from its daily low prior to the two announcements, which triggered the rally.

The rally by the USD/CAD currency pair can largely be attributed to the decision by the Bank of Canada to maintain its overnight rate target at 0.5%, which was in line with market expectations. The currency pair was also affected by the stronger US dollar due to the better-than-expected February ISM manufacturing data, which was recorded at 57.7 beating the market consensus of 56.2.

The currency pair was also affected by the positive market sentiment towards the US dollar, which resulted in higher US bond yield, and a bullish greenback. The higher Markit Canada Manufacturing PMI recorded at 54.7 combined with the positive sentiment in the oil markets did little to boost the loonie, which is backed by commodities.

The currency pair is likely to be affected by the release of Canada’s annualized GDP for December slated for tomorrow.

The USD/CAD was trading at 1.3335 as at 16:57 GMT having risen from a low of 1.3076 prior to the release. The CAD/JPY was trading at 85.16 having dropped from a high of 85.66 prior to the BoC announcement, indicating that the loonie weakened against its main rivals today.

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