The Canadian dollar (CAD) was little changed. The Bank of Canada (BoC) policy decision is a statement only today at 9.45 EST, with Governor Macklem speaking 45 minutes later to clarify messaging, Sean Osborne and Eric Theoret, senior FX strategists at Scotiabank, report.
The Bank of Canada is expected to provide neutral, options-focused messaging
“Will the Bank agree to a rapid repricing of policy expectations after Friday’s jobs data? No. Do we expect them to? Also no. It is too far away and there is still too much uncertainty from the Bank’s view to commit to any view at the moment. What we are likely to get is a pending statement/neutral messaging that reinforces the idea that the easing cycle is likely to complete with policy option maintained.”
“However, markets know that central banks rarely remain inactive for very long. A rate hike later next year would be in line with the typical gap between the end of the Bank of Canada policy cycle and the beginning of the next. The relatively hawkish bias in the market’s view of the Bank of Canada’s policy outlook should be supportive for the Canadian dollar.”
“USD/CAD is holding a narrow sideways trading range after falling at the beginning of the week to test the 1.38 area. Spot gains remain limited and the price action appears to be drawing a bearish continuation signal (falling wedge) since Monday. This pattern indicates a resumption of USD losses below 1.3840 during the day. An extension of the USD decline below 1.380 targets a drop to 1.3750/60. Resistance is in place 1.3860 And 1.3930/40.”
