When is the BoC monetary policy decision and how could it affect USD/CAD?


BoC Monetary Policy Decision – Overview

The Bank of Canada (BoC) is scheduled to announce its monetary policy decision this Wednesday at 15:00 GMT and is expected to leave the key interest rate target at the rock-bottom level of 0.25%. In the absence of the post-meeting press conference, the focus will be on the accompanying rate statement for fresh clues about the central bank's outlook on interest rates. The market bets for a possible rate hike in Q1 have been increasing, suggesting that there is a risk of disappointment if the Canadian central bank maintains its current monetary policy stance.

Analysts at Citibank offered their take on the upcoming meeting and wrote: “We expect the BoC to leave rates unchanged at 0.25% though we will watch for signs the BoC could be considering a rate rise even earlier than the latest guidance for the ‘middle quarters of 2022’. After the hawkish October surprise, we expect a slightly hawkish tone to this meeting with risks tilted to an even more hawkish shift, with BoC perhaps signaling openness to a Q1 hike.”

How Could it Affect USD/CAD?

Heading into the key event risk, bullish crude oil prices acted as a tailwind for the commodity-linked loonie and dragged the USD/CAD pair to a near three-week low on Wednesday. A more hawkish shift should provide an additional boost to the Canadian dollar and set the stage for an extension of the pair's corrective pullback from a multi-month high touched last week.

Given the aggressive market pricing for an early rate hike, a mention of the risks associated with the emergence of the new Omicron variant of the coronavirus would be enough to weigh on the Canadian dollar. This, along with the underlying bullish sentiment surrounding the US dollar, will set the stage for the resumption of the USD/CAD pair's uptrend witnessed since October.

Key Notes

 •  Bank of Canada Interest Rate Decision: Mr. Macklem goes first

 •  BoC Preview: Forecasts from seven major banks, inching ever closer to rate hikes

 •  USD/CAD Analysis: Corrective pullback stalls near 38.2% Fibo., focus shifts to 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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD on the way to 1.1280 key support

EUR/USD fails to cheer greenback weakness, stays depressed around 1.1310 during the initial Asian session on Friday. While portraying the sober mood of the major pair traders, the quote remains below 200-SMA for the first time in a fortnight.

EUR/USD News

GBP/USD holds above 1.3600 as dollar fails to capitalize on US data

GBP/USD tested 1.3600 earlier in the day but managed to stage a recovery in the early American session. The greenback is having a hard time gathering strength as investors assess the mixed macroeconomic data releases from the US.

GBP/USD News

Gold bulls looking for a re-test of November high at 1,877.15

Gold resumed its advance after a short-lived consolidative stage, reaching a fresh two-month high of $1,847.92 a troy ounce. The dollar came under renewed selling pressure after the US released mixed economic figures.

Gold News

Decentraland holds support but MANA may return to $2

Decentraland price action is, at present, very indecisive. However, while the overall outlook is bearish – especially within the Ichimoku Kinko Hyo system, there is evidence that a turnaround to the upside may be coming soon.

Read more

When real rates are negative for a sustained period, is it a sign of looming recession?

We agree that inflation should moderate this year due to the money side of things, but worry that monetary policy is powerless against most of the supply chain issues, commodity prices, greedy consumer goods companies, and that weird labor shortage.

Read more

Forex MAJORS

Cryptocurrencies

Signatures