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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.