Forex Investment and Currency Trading

USD/CAD has rallied sharply at the outset of the week, with the USD generally better supported across the board (the exception being the JPY). The CAD had adopted a more defensive tone last week after failing to hold below the 1.20 level and, with the BoC policy meeting looming, profit taking has turned into outright shorting activity amid speculation that the central bank will announce more stimulus measures this week. Although policy makers will not likely to announce QE measures at tomorrow’s meeting, however; some look for the BoC to outline what it could do in terms of non-standard monetary policy in Thursday’s MPR and note that the central bank’s first options may not include outright purchases of government bonds and are more likely to focus instead other credit easing measures as opposed to quantitative easing measures per se. Ahead of the BoC, however, the strong CAD tone seen since early April is clearly ebbing.