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 anticipated to maintain status-quo and leave its benchmark interest rates unchanged at 0.25% at the conclusion of the October policy meeting. Market expectations for any kind of a policy shift in the accompanying policy statement are also low. Meanwhile, the BoC Governor Tiff Macklem recently left the door open for negative rates and hence, the focus will be on any further talks in that direction.
How could it affect USD/CAD?
The recent price action has been influenced by developments surrounding the coronavirus saga, oil price dynamics and the US political uncertainty. The Canadian dollar is unlikely to move in any significant direction unless there is a surprise along the yield curve control or a meaningful QE change.
Ahead of the key event risk, the USD/CAD pair rallied to three-week tops, around the 1.3300 mark, amid a broad-based USD strength and tumbling crude oil prices. Some follow-through buying beyond the 1.3330-35 supply zone should pave the way for a move back towards reclaiming the 1.3400 round-figure mark.
On the flip side, any meaningful pullback now seems to find decent support near the 1.3225-20 region. Failure to defend the mentioned level might prompt some technical selling and drag the USD/CAD pair back below the 1.3200 mark. The downward trajectory could further get extended towards challenging the next major support near the 1.3110-1.3100 zone.
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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