(Bank of Canada: Wikipedia)The Bank of Canada concluded its interest rate meeting today (3/6) and decided to maintain the current interest rate levels. " The Bank of Canada today maintained its target for the overnight rate at 1 ¾ per cent. The Bank Rate is correspondingly 2 per cent and the deposit rate is 1 ½ per cent. Recent data suggest that the slowdown in the global economy has been more pronounced and widespread than the Bank had forecast in its January Monetary Policy Report(MPR). While the sources of moderation appear to be multiple, trade tensions and uncertainty are weighing heavily on confidence and economic activity. It is difficult to disentangle these confidence effects from other adverse factors, but it is clear that global economic prospects would be buoyed by the resolution of trade conflicts. Many central banks have acknowledged the building headwinds to growth, and financial conditions have eased as a result. Meanwhile, progress in US-China trade talks and policy stimulus in China have improved market sentiment and contributed to firmer commodity prices. For Canada, the Bank was projecting a temporary slowdown in late 2018 and early 2019, mainly because of last year’s drop in oil prices. The Bank had forecast weak exports and investment in the energy sector and a decline in household spending in oil-producing provinces. However, the slowdown in the fourth quarter was sharper and more broadly based. Consumer spending and the housing market were soft, despite strong growth in employment and labour income. Both exports and business investment also fell short of expectations. After growing at a pace of 1.8 per cent in 2018, it now appears that the economy will be weaker in the first half of 2019 than the Bank projected in January. Core inflation measures remain close to 2 per cent. CPI inflation eased to 1.4 per cent in January, largely because of lower gasoline prices. The Bank expects CPI inflation to be slightly below the 2 per cent target through most of 2019, reflecting the impact of temporary factors, including the drag from lower energy prices and a wider output gap. Governing Council judges that the outlook continues to warrant a policy interest rate that is below its neutral range. Given the mixed picture that the data present, it will take time to gauge the persistence of below-potential growth and the implications for the inflation outlook. With increased uncertainty about the timing of future rate increases, Governing Council will be watching closely developments in household spending, oil markets, and global trade policy. " From Bank of Canada The acknowledgement of headwinds softened the market's view on the Canadian Dollar (CAD). In turn the $USDCAD rallied sharply, continuing its prevailing bullish trend in a rising channel. USD/CAD Daily Chart (click to enlarge) Bullish Breakout:- Price action has been in a bullish channel since late 2017.- In 2019, price retreated from the channel resistance to support where USD/CAD traded sideways for a couple of months.- The respect of 1.31 as support confirmed the bullish channel. - This week, price returned above the moving averages - a sign that bulls are still in control.- Finally, the break above 1.3375 is a break from the recent consolidation. It is a bullish continuation breakout.- We should anticipate upside to at least 1.3650.- I think if price can make it up to 1.3650, it will have upside towards the next key resistance around 1.38-1.3820. - Based on the bullish picture from the weekly chart, we might see USD/CAD push even higher towards the 1.47 high from 2016. - But for now, we should probably limit the upside to the 1.38-1.40 area. I would expect a significant pull back towards 1.35 before the market pushes above 1.40 and opens up the 1.47 target. USD/CAD Weekly Chart (click to enlarge)