USD/CAD hits a session low of 1.3492 currently
The pair tried to make a break for the topside overnight when it touched a high of 1.3547 after the BOC meeting decision but the central bank really didn't offer much as seen from the statement here.
The recovery in oil prices and risk sentiment in general helped the loonie gain some ground thereafter and we're seeing a bit more of an extension similar to that in trading today. Right now, price has fallen back into that ping pong range of being under 1.3500 but holding above the 1.3400 handle.
So, what's next for the pair?
Given that the BOC is out of the way now, it'll all come down to risk flows as we look to close out the week. The fact that USD/CAD is falling back into an indecisive range is very much a reflection of how markets are trading at the moment.
There is some slightly cautious optimism among major currencies and equities today, but once again the bond market isn't buying into the story. Treasury yields are more or less flat and without confirmation there, I don't see how a risk-on run will materialise.
In times like these, trading direction is rather hard to get a grip of and what makes matters worse is that there is month-end flows to deal with.
The thing about risk flows is that they can quickly switch on or off so the best way to capitalise on that is to go with any key breaks. In that regard, I'd watch for yen pairs rather than focus on a proxy trade like this.
But for USD/CAD in general, unless price action starts firmly breaking away from the 1.3400 to 1.3500 range, we're only going to see more choppy price action from hereon. Besides risk sentiment, BOC deputy governor Wilkins is also due to speak later at 1815 GMT so keep an eye out on that in case for any notable comments.
