Bank of Canada will support the Loonie?
|Today we can expect to see the 8th rate rise served up by the Bank of Canada in the recent rate hiking cycle taking the benchmark rate to 4.5%. This is pretty much baked into the ‘Lonnie pie’. Traders are on standby for hints of a rate pause with expectations that they are very close to the ‘terminal rate’. However, I think the Australian CPI data overnight could upset a few of these dovish players. Australian CPI came in at a whopping 8.4%, far beating the 7.6% expectations. The China opening up story is likely to have increased inflationary pressure and my view is that the BOC will be more hawkish than the markets are giving credit for. Oil prices and 'risk on' assets remain firm and like to further support the Canadian dollar.
When trading Forex it is advisable to trade strong against week. To increase your edge you are better off selling the weaker currency. The momentum meter chart here shows the GBP as the weakest currency in the basket of 8. Selling GBPCAD is my play over the rate decision with targets down at the 1.6250 demand zone. If I am wrong, moves above 1.6550 will stop me out! It has been known. As always, this is not to considered as investment advice and should not be traded blindly. It is purely an example of my fundamental and technical analysis.
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