Bank Of Canada Monetary Policy Report Expects Growth In 2010 And 2011, Contained Inflation, And Steady Rates

The Bank of Canada said today they expect the Canada economy to show a 3% growth rate in 2010 and 3.3% growth in 2011.  The growth is expected to be fueled by Household and Government.  Inflation is expected to remain low with inflation approaching the target level of 2% in the 3rd quarter of 2011. The core inflation rate should bottom at 1.4% in the 4th quarter.  As mentioned after the last interest rate decision this week, the BOC expects rates to stay at 0.25 through June 2010.  Also they commented that the C$ strength comes more from US$ weakness rather than C$ strength.

The USDCAD has moved lower on the report - perhaps in reaction to the view the curency is more a USD thing as opposed to a C$ strength thing.  This may indicate an acceptance by the central bank.  The price has moved below the 100 bar MA at the 1.0502 level. This will now be resistance for the pair.  A confirmation will come on a break of the 200 bar MA at the 1.0476 level (green line in the chart above)

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