USD/CAD: BoC rate decision and 1.3500 on Wednesday in focus
The USD/CAD finds itself in a very interesting spot before today's Bank of Canada rate decision. While no significant change in the monetary policy is expected, and the BoC can be expected to hold interest rates at the current level for an extended period of time, any switch in one direction or the other could cause increased volatility.
After Canada posted the largest one-month gain in net jobs on record at the beginning of the month (which countered some of the rhetoric we've seen from the Bank of Canada at the last meeting in April where she nearly fully abandoned its bias towards raising interest rates), it will be interesting to see whether BoC Governor Poloz will again try to direct the statement in direction of the Canadian economic outlook or if he will start an attempt to somehow down-talk the CAD by focusing a little more on the deterioration in the trade relationship between the US and China, and the potential headwinds Canada's economy could face resulting from that.
If we get to see such an indirect 'down-talk-attempt', finally a break above 1.3500, levelling the path up to the current yearly highs around 1.3670 in USD/CAD could be the result.
On the other hand: focus may still be on the positive economic developments in Canada, with market participants reading a slight hawkish touch despite the established neutral expectation in regards to rate hikes, which could trigger an attempt to break below 1.3280/3300 and out of the trend channel - activating an initial target on the downside around 1.3170.
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Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
After Canada posted the largest one-month gain in net jobs on record at the beginning of the month (which countered some of the rhetoric we've seen from the Bank of Canada at the last meeting in April where she nearly fully abandoned its bias towards raising interest rates), it will be interesting to see whether BoC Governor Poloz will again try to direct the statement in direction of the Canadian economic outlook or if he will start an attempt to somehow down-talk the CAD by focusing a little more on the deterioration in the trade relationship between the US and China, and the potential headwinds Canada's economy could face resulting from that.
If we get to see such an indirect 'down-talk-attempt', finally a break above 1.3500, levelling the path up to the current yearly highs around 1.3670 in USD/CAD could be the result.
On the other hand: focus may still be on the positive economic developments in Canada, with market participants reading a slight hawkish touch despite the established neutral expectation in regards to rate hikes, which could trigger an attempt to break below 1.3280/3300 and out of the trend channel - activating an initial target on the downside around 1.3170.
Ready to start trading the live markets? Then open a free account with Admiral Markets - 8,000+ instruments to choose from, some of the market's tightest typical spreads, and the world's #1 multi-asset trading platform. admiralmarkets.com/start-trading/
Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
