One of the key events for the euro this week will be today's meeting of the Bank of Canada.
According to the latest data, the country's GDP expanded by 0.1% against a rise of 0.5% in the earlier quarter in the fourth quarter of 2018. The value of the indicator was the lowest since the second quarter of 2016. At the same time, consumer price growth slowed to its lowest level in more than a year.
According to experts, all of these give the Canadian Central Bank food for thought and an excuse to take a wait-and-see stance in the matter of tightening monetary policy.
The derivatives market now estimates the likelihood of an overnight rate increase by the middle of this year to be only 16%, which puts a stick in the wheels of the "bears", who do not find support in the oil market either.
Despite the decrease in OPEC's black gold production in February and progress in the Washington-Beijing trade negotiations, growth in raw material production in the United States and oil reserves in the country over five of the last six weeks are currently putting pressure on quotations.
If we take into account the disappointing statistics on Canadian GDP and the steady growth of the same indicator in the United States, it becomes clear why the USD/CAD bears lost all dividends received from more than 20% oil rally since the beginning of the year.
Meanwhile, Scotiabank experts believe that the slowdown in the Canadian economy is a temporary phenomenon that can only increase the likelihood of the use of fiscal stimulus by the government. At the same time, the fading effect of tax reform, as well as, the negative impact of greenback strengthening on exports and weak external demand paint a rather pessimistic picture for US GDP. Based on this, it can be assumed that the USD/CAD pair will continue to consolidate in the region of 1.31-1.35 in the medium-term horizon.
As for the short-term outlook for this week, besides the BoC meeting, it makes sense to pay attention to statistics on the American and Canadian labor markets for February, which will be released on March 8. It is expected that weak data on the United States against the background of improved indicators in the Country of the maple leaf will allow selling USD/CAD on growth.
