When is the BoC monetary policy decision and how could it affect USD/CAD?
|BoC monetary policy decision – Overview
The Bank of Canada (BoC) is scheduled to announce its latest monetary policy update at 14:00 GMT this Wednesday. The BoC is widely expected to maintain status-quo and leave its benchmark interest rates unchanged at 0.25% at the conclusion of June policy meeting, marking the first day on the job for the new Governor Tiff Macklem. Hence, the key focus will be on the accompanying monetary policy statement, where investors will look for clues about setting negative rates and possibilities of additional bond-purchases.
How could it affect USD/CAD?
Ahead of the key event risk, the USD/CAD pair staged a goodish intraday bounce from the vicinity of the very important 200-day SMA support. A dovish tone would send the loonie sharply lower and prompt some aggressive short-covering move around the major. Conversely, an upbeat economic outlook might turn the pair vulnerable to extend its recent bearish trajectory.
Meanwhile, any meaningful recovery beyond the 1.3570-80 immediate resistance, leading to a subsequent move beyond the 1.3600 mark seems more likely to confront some fresh supply and remain capped near mid-1.3600s. On the flip side, the key 1.3500 psychological mark now seems to protect the immediate downside, below which the pair could accelerate the fall further towards the 1.3460 region (200-DMA).
Key Notes
• BOC Preview: Will Tiff Mackelm be tough? Three ways the new governor can move USD/CAD
• BoC: Six major banks expectations for the Interest Rate Decision
• USD/CAD climbs above 1.3550 on oil selloff, eyes on BoC policy announcements
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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