Bank of Canada rate decision is a major focus today. Speculation of a September hike cooled drastically as NAFTA negotiation stalled last week. Markets are now generally expecting BoC to hold the overnight rate unchanged at 1.50% today. Instead, markets are expecting BoC to signal a move in October. That signal is a key to Canadian Dollar’s near term movement. Meanwhile, negotiation with US will also resume today. But based on Prime Minister Justin Trudeau’s firm stance on Chapter 19 dispute resolution mechanism, it’s unlikely to a break through any time soon.
Suggested readings on BoC and Loonie:
- BOC Preview – Growth Upbeat, Just Not Justifies Another Rate Hike Until October
- BoC To Hold Rates Steady But Signal October Hike? Trade Developments Another Loonie Driver
- The Drivers of the Loonie
Canadian Dollar recovers mildly today but remains the weakest one for the week, in particular against Dollar and Euro. EUR/CAD’s firm break of 55 day EMA and medium term falling trend line suggests that decline from 1.6151 has completed with three waves down to 1.4798. Immediate focus is now on 38.2% retracement of 1.6151 to 1.4798 at 1.5315. Sustained break there should confirm bullish reversal and bring stronger rally to 61.8% retracement at 1.5634 and above.
