The Bank of Canada will deliver its interest rate ‘decision’ and monetary policy statement in tomorrow morning’s US session. According to futures markets, traders are not expecting any changes to monetary policy tomorrow and only a 16% chance of a rate hike by the BOC’s July meeting.

As we noted on Friday though, Canada has seen a run of poor economic data of late, so the central bank is more likely to drop its previous hawkish bias in favor of a neutral outlook, mirroring the Fed’s shift to neutral on the other side of the 49th parallel. Specifically, traders will be looking for the BOC to remove the warning about rising interest rates over time. If seen, this tweak could take USD/CAD above 1.3400 in tomorrow’s trade.

That said, the central bank may opt to wait until it releases its quarterly economic forecasts in the April meeting before making any dramatic changes to its guidance. If the statement is little changed from January, we could see a quick bout of weakness in USD/CAD (strength in CAD), though the big technical breakout at 1.3300 may put a floor under rates unless oil prices surge.

- advertisement -

Previous articleUSD/JPY Climbs To Key Level On Stronger US Data
Next articleEUR/JPY Testing Crucial Support Near 126.30
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.