The rates continue within the downtrend which began in mid-March and has every chance to continue. The market situation has changed in favor of commodity risky assets recently, when key countries began to gradually come out of quarantine, easing the restrictions imposed, so the economy began recovering. The US dollar, which was previously a safe haven currency for investors during the height of the pandemic, was under pressure.
In May, the Canadian dollar received even more stimulus for growth after the situation on the oil market stabilized, and drops to zero remained in the past. According to the latest reports, the Canadian economy shrank by 7.2%, which is better than the forecasts, while the business activity index in May rose to 40 pips from 33 a month earlier. In any case, the widespread growth of business activity and economic recovery motivates investors to continue investing in commodity assets.
In the near future, we expect a meeting of the Bank of Canada, where it is highly likely that the rate will remain unchanged. The Bank of Canada is expected to indicate the country is on its way to economic recovery. In addition, data on the trade balance of Canada is also expected at that time.
At the same time the US dollar may still be under pressure due to the labor market situation and new unemployment reports. Therefore, we believe that the deals to SELL will remain the most effective in the medium term. Most technical analysis tools also tend to follow the trend.
