The Bank of Canada (BOC) decided to hike rates again by another 50 basis points regardless of slowing economic concerns. The loonie is stronger today as a result of this. This is what could likely happen to loonie pairs after this news.
Analysts predict a Canada's GDP to dip further going into Q3 while annual growth rate sinks. Unemployment is expected to remain where it's at for most quarters up until 2023. The 2023 inflation cap target looks to be in sight if the BOC can keep their aggressive stance towards interest rates. However, their economy will probably take a hit in the meantime as policy makers attempt to get inflation under control.
CAD/JPY hits a previous top on the 1D timeframe to make a second test on resistance. After the BOC's recent decision, the pair could break above this level and head to the 104.000s. Price would just need to close above this level in the 102.700s to solidify that move higher. Support lies below in the low 100.000s and the 50 DMA underneath.
USD/CAD sways back and forth as the demand for either currency keeps investors indecisive on direction. The pair is currently on support, and came back up from the lows of today suggesting a move higher. However, the day needs to close above this level to suggest a bullish move; plus resistance lies in the way at the 200 and 50 DMAs.
This pair looks like the most promising setup out of the CAD pairs. Good rejection from the highs on AC suggest that price will dip to the double bottom on the 1D. Especially after this rate hike, investors will probably seek the loonie over the buck for the time being.
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