BOC Preview: Will Poloz and Company Shift into Neutral This Month…Or Next?
Matt Weller, CFA, CMT March 5, 2019 10:28 PM
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.
Source: TradingView, FOREX.com
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. 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 or sale of any currency or CFD contract. 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. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. 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.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.