When is the BoC monetary policy decision and how could it affect USD/CAD?
|BoC monetary policy decision - Overview
Wednesday's key focus will be on the latest monetary policy update by the Bank of Canada (BoC), scheduled to be announced at 14:00 GMT. The central bank is widely expected to maintain status-quo and leave benchmark interest rates unchanged at 1.75% when it concludes its April policy meeting later today. Hence, the key focus will be on the tone in the accompanying policy statement and updated economic projections (the Monetary Policy Report). This will be followed by the post-meeting press conference and would further contribute towards driving sentiment surrounding the Canadian Dollar.
Analysts at TD Securities write, “we expect the Bank to formally drop its bias towards higher rates by noting that future moves (not hikes) will be subject to increased uncertainty while updated forecasts should see near-term growth downgraded.”
How could it affect USD/CAD?
Ahead of the key event risk, the pair was seen consolidating the recent gains to seven-week tops amid expectations that the BoC may again strike a more cautious tone amid the recent softness in the domestic economy. A more dovish shift might exert some additional downward pressure on the Canadian Dollar and lift the pair further towards reclaiming the key 1.3500 psychological mark. A follow-through buying should pave the way for an extension of the positive momentum further beyond the 1.3600 mark towards challenging Dec. 2018 swing highs, around the 1.3660-65 region.
On the flip side, any hawkish, rather less dovish signals might prompt some aggressive long-unwinding trade and drag the pair back below the 1.3400 round figure mark towards testing an important horizontal support near the 1.3340 region. The downward momentum could further get extended towards challenging 100-day SMA support, currently near the 1.3300 handle.
Key Notes
• Bank of Canada Rate Policy Preview: Shift to neutral
• BoC Preview: 7 Major Banks expectations from April meeting
• USD/CAD climbs further beyond mid-1.3400s, near 7-week tops ahead of BoC
About the BoC interest rate decision
BoC Interest Rate Decision is announced by the Bank of Canada. If the BoC is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the CAD. Likewise, if the BoC has a dovish view on the Canadian economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.
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