BoC Preview: Uncertain future set to overshadow upbeat performance and crush the loonie


The Bank of Canada (BoC) is set to leave rates unchanged but rock markets with its quarterly report which includes new forecasts and is accompanied by a press conference. There are significant changes that Governor Macklem emphasizes the uncertain future over the recent recovery, weighing on the loonie, FXStreet’s Analyst Yohay Elam reports.

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Key quotes

“Governor Tiff Macklem and his colleagues are set to leave the interest rate unchanged at 0.25% but may lay out hints about future policy via their quarterly Monetary Policy Report (MPR) which includes new forecasts. Graphs such as these will likely be on their minds.”

“If the BOC releases cautious forecasts that point to a slower recovery – and also accompanies it by stating uncertainty is high – the loonie would fall and USD/CAD would rise. This scenario has the highest probability.”

“If Macklem and co. strike a balance between recent growth and slower yet acceptable levels of recovery afterward, USD/CAD could chop around and swiftly return to moving on other factors such as the general market mood and oil prices. Barrel prices have been remarkably stable of late.” 

“In the unlikely case that the bank focuses on the bouncing labor market and conveys an upbeat message, USD/CAD would fall.”

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