CAD steady ahead of BoC decision and Macklem remarks – Scotiabank

The Canadian Dollar (CAD) is little changed. The Bank of Canada (BoC) policy decision is a statement only affair today at 9.45ET, with Gov. Macklem speaking 45 minutes later to finesse messaging, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

BoC expected to deliver neutral, optionality-focused messaging

"Will the Bank endorse the swift repricing of the policy outlook following Friday’s jobs data? No. Would we expect them to? Also no. It’s too far away and there’s too much uncertainty still from the Bank’s point of view to commit to any view right now. What we are likely to get is a holding statement/neutral messaging the reinforces the idea that the easing cycle is very likely complete whilst maintaining policy optionality."

"Still, markets know that central banks rarely stay inactive for too long. A rate hike later next year would be in line with the typical gap between the end of one BoC policy cycle and the start of the next. The relatively hawkish bias in the market’s perspective of the BoC policy outlook should be CAD-supportive."

"USD/CAD is holding a tight, sideways trading range after the early week dip to test the 1.38 area. Spot’s gains remain capped and price action appears to be carving out a bearish continuation signal (bear wedge) since Monday. The pattern implies a resumption of USD losses below 1.3840 intraday. An extension of the USD’s decline below 1.380 targets a drop to 1.3750/60. Resistance is 1.3860 and 1.3930/40."