BoC likely to leave rates unchanged at 1.75% - TDS

Sandeep Kanihama FXStreet Contributor

Analysts at TD Securities suggest that the Bank of Canada will publish the policy statement and Monetary Policy Report at 10:00 ET on April 24^th and they are looking for the Bank to leaves rates unchanged at 1.75%, although new projections and a change to the forward-looking components of the statement should give a dovish tone.

Key Quotes

“At 11:15 ET we will hear from Governor Poloz and Senior Deputy Governor Wilkins in a press conference.”

“We no longer expect further rate hikes from the Bank of Canada, meaning the overnight rate will top out at 1.75% this cycle. Q4 GDP was the nail in the coffin, as the muted growth figures and expectations for sub-trend growth in Q1 imply a wider output gap that will not close before the end of 2020.”

“Furthermore, recent developments suggest that homeowners are still struggling to adapt to higher rates, with existing home sales holding near a 7-year low in March while household leverage sits at a record high. Core inflation firmed to 1.97% in March but most of the move was driven by base-effects and we see little scope for further gains given the muted growth backdrop.”

“The labour market remains the one bright spot in the domestic economy and while we did lose 7k jobs in March, the six-month average is still elevated at 36k. Furthermore, wages have finally started to pick up off the lows but this alone is not enough to keep the BoC on a tightening path.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.