BoC is expected to deliver an “insurance” rate hike of 25bps today, to bring policy rate to 4.50%. After this eighth consecutive increase, the central bank is expected to pause the tightening cycle.
It’s already indicated in the December statement that the bank will be “considering whether the policy interest rate needs to rise further”. BoC should more explicitly indicate that it’s now the time to let pass rate hikes work through the economy.
The question would then shift to the time interest rate is going to stay at this level, but no answer is expected any time soon.
Here are some previews on BoC:
- Will BoC Press the Hike Button One More Time?
- Market Pricing and Economists Favour a 25bp Hike from the BOC Tomorrow
- Bank of Canada Likely to Make One Last Rate Hike—Then Take a Breather
CAD/JPY has been losing downside momentum for some time, as seen in daily MACD and a bounce is overdue. Yet, even in case of a rebound, strong resistance could be seen between 55 day EMA (now at 99.65) and 38.2% retracement of 110.33 to 94.61 at 100.61 to cap upside. Until 100.61 is taken out decisively, any bounce is more of a short opportunity than a turnaround.
