BoC is generally expected to continue with tapering today, reducing weekly asset purchases from CAD 3B to CAD 2B. It’s also expected to maintain the projection that first rate hike would happen in H2 of 2022. The focuses would be on new economic projections, in particular, on whether inflation forecasts would be up graded significantly.
Here are some previews on BoC:
- BOC Preview – Hawkish Stance to Maintain with More Tapering
- BOC Preview: Ready To Continue Tapering, But Does That Mean USD/CAD Will Move Lower?
- Bank of Canada to Taper Again as Loonie Succumbs to Delta Concerns
Canadian Dollar’s reaction to BoC’s tapering hasn’t been positive so far. Outlook in EUR/CAD is unclear. Bullish convergence in daily MACD argues that medium term momentum is diminishing. Yet, it failed to sustain above the 55 day EMA, despite rebounding to 1.4913. Also, price actions from 1.4580 are more corrective looking than not. So, we’d see if today’s BoC announce could finally trigger deeper fall back towards 1.4580.