Progress in US stimulus talks boosted risk sentiment.
Bank of Canada’s wait-and-see stance could lift the CAD.
USD/CAD set to extend losses as RSI dips into oversold territory.
CAD/JPY eyes move higher as price flirts with key resistance.
Equity markets advanced in the Asian session amid progress in US fiscal stimulus negotiations.
Australia’s ASX 200 advanced 0.61% after Westpac Consumer Confidence index rose to its highest level in a decade. Japan’s Nikkei 225 surged 1.33%.
Attention will turn to the Bank of Canada’s interest rate decision.
Steady As You Go BoC Could Lift Canadian Dollar
The Canadian Dollar could extend gains versus safe haven counterparts following positive coronavirus vaccine developments and the BoC’s wait-and-see approach to monetary policy.
The market expects the BoC to hold pat on its monetary policy settings at its upcoming meeting.,
Whilst Covid-19 cases have surged in Canada forcing tighter lockdown, robust fiscal support could mean that the BoC sits on the sidelines for now.
At the end November Finance Minister Chrystia Freeland unveiled over C$51.7 billion of additional fiscal stimulus including an enhanced wage subsidy program.
With the imminent rollout of a covid vaccine ether is a good chance that the economic recovery will pick up.
These positive factors may convince the BoC to keep its monetary policy settings steady and in turn put a premium on the cyclically-sensitive CAD.