The economic calendar was light of Tier 1 data points today, but we did have the UK CPI in the morning, the Canadian CPI in the afternoon along with the Bank of Canada's interest rate decision.
Cable for the most part of the trading day stayed within a tight range having shed some of its gains from Monday. 1.3900 was a good level for buyers to hang out and wait to see if the market would give them a chance to get in at what turned out to be the 61.8% retracement level of the impulsive move spanning from 1.3810 to the 1.4012 price levels.
Today’s CPI data shows the annual inflation rate in the United Kingdom missed expectations slightly with a rise up to 0.7% in March from 0.4% in February.
The Loonie was true to its name today, falling nearly 180 pips in an hour following on from the Bank of Canada’s announcement. The USDCAD fell from the day’s highs 1.2650 when BoC Governor Macklem delivered the post-meeting press conference. The Canadian dollar appreciated on his comments around the performance and increased confidence in the underlying recovery of the Canadian economy.
The ActivTrader sentiment indicator is the extreme bullish levels with 90% of traders wanting to be long the USDCAD.
The Canadian inflation rate has risen to 2.2% in March from 1.1% in February which was below market expectations of 2.3%. The BoC decided to keep the overnight rate on hold at the effective lower bound of 0.25%, with the Bank Rate remaining at 0.5% and the deposit rate at 0.25%.
The Dow Jones Industrial Average and the S&P 500 found some support today in the US session, with the Nasdaq little changed even after the bounce back in the Netflix shares. The pandemic situation is still worrying investors as infections in India, Canada and Japan are rising.