**USD/CAD Holds Steady Above 1.3770 as Bank of Canada Supports Lumber Industry**
*By FXStreet News Team | Extended and rewritten by AI based on original reporting*
The USD/CAD currency pair continues to exhibit resilience as it trades above the 1.3770 mark amid new economic developments in Canada and broader global financial influences. The Canadian dollar held steady during early Asia-Pacific trading after Bank of Canada (BoC) Governor Mark Carney announced new support measures aimed at stabilizing the country’s lumber industry, which has been under considerable strain due to tariffs, declining exports, and weaker housing market demand.
Investors are closely watching the developments in the lumber sector alongside the broader Canadian economy as a barometer for future monetary policy action. The BoC’s involvement in supporting an industrial sector marks a rare yet significant policy move that signals the country’s proactive approach in dealing with sector-specific challenges that may impact national growth.
This article delves into multiple factors influencing the USD/CAD exchange, from the Bank of Canada’s decision, economics of the lumber industry, U.S. dollar strength, and broader macroeconomic developments affecting the forex market.
## BoC Lays Out Economic Measures for Canada’s Lumber Sector
BoC Governor Mark Carney announced a series of financial support measures targeting the lumber industry, which is a critical component of Canada’s export mix. The initiative comes at a time when Canadian lumber producers are coping with increased international scrutiny, particularly from the United States, which has imposed tariffs amid ongoing disputes over trade subsidies and pricing.
### Key Features of Support Measures:
– **Immediate Financial Aid**: The central bank plans to collaborate with provincial governments to disburse C$2.5 billion in financial aid, which could take the form of low-interest loans and direct grants to struggling lumber companies.
– **Export Credit Facility**: A proposed C$1 billion credit facility to support lumber exporters in securing new international markets outside the United States.
– **Sustainability Grants**: Around C$500 million earmarked for sustainability initiatives and modernization of aging infrastructure in the lumber sector.
– **Job Protection Plan**: Measures will be taken to protect an estimated 62,000 jobs across Canada’s regions that are heavily dependent on logging and its supplemental industries.
Carney’s statement emphasized that the central bank remains committed to ensuring the resilience of industries that are significant to Canada’s economic diversification. “The lumber industry is foundational to many rural communities, and it is our responsibility to support its transformation toward greater productivity and sustainability,” said Carney.
## USD/CAD Maintains Firm Stance Above 1.3770
The USD/CAD pair continues to consolidate above the critical psychological level of 1.3770 on the back of Canada’s industrial support announcement and moderate U.S. dollar strength. The pair had recently rallied following hawkish commentary by the Federal Reserve indicating a persistently tight U.S. monetary policy stance, adding to its upward momentum.
### Technical Overview of USD/CAD:
– **Support Levels**: Initial support at 1.3740 followed by lower support at 1.3660.
– **Resistance Levels**: Immediate resistance sits at 1.3815, followed by 1.3850.
– **Momentum Indicators**:
– The Relative Strength Index (RSI) remains slightly above 60, indicating mild bullish momentum.
– Moving Averages (50 EMA and 200 EMA) are in a bullish alignment, offering underlying support to USD/CAD’s upward momentum.
FX traders are watching for a decisive break above 1.3815 which could trigger further gains toward the 1.3900 zone. Conversely, any sharp reversal below 1.3740 might indicate a retracement in the short-term trend.
## Broader Canadian Economic Picture
The Bank of Canada’s policy tools have become more diversified as the country faces economic uncertainties. Beyond efforts to stabilize the lumber sector, the BoC continues navigating inflationary pressures, a
Read more on USD/CAD trading.