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BoC Keeps Rates Unchanged - USD/CAD Drifts Lower

The Bank of Canada announced that it will maintain the overnight rate at 1.00%. The bank rate and deposit rate will be held at 1.25% and 0.75% respectively.

This is no surprise. The tone may be slightly hawkish relative to some recently cautious tone. It acknowledge some economic improvement, but not enough to start consideration of any policy change.

From the BoC release:
"In Canada, economic growth in the fourth quarter of 2013 was slightly stronger than the Bank anticipated, and upward revisions earlier in the year further raised the level of GDP...

...On the whole, the fundamental drivers of growth and inflation in Canada continue to strengthen gradually, as anticipated. With inflation expected to be well below target for some time, the downside risks to inflation remain important."

(USD/CAD 4H chart)

The market had some volatile trading in the USD/CAD related to the release, but eventually settled in favor of CAD strength.

However, the technical picture does not convince me of a bear market yet. Price in the past 2 weeks is looking more like a falling wedge - in other words, consolidation continues.

For me, the 1.1010-1.1025 area is key and I expect some intra-session support here. However the market is likely to remains tentative until either the NFP on Friday.