USD/CAD SSI Shows 70 Percent Traders Net Short Day Before FOMC
- Approximately 70 percent of traders are net short USD/CAD pair going into the FOMC meeting
- The SSI reading is the most extreme bearish view since January
- Bank of Canada governor states that negative rates remain a possible policy tool
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The USD/CAD’s Speculative Sentiment Index reading is currently at -2.19 indicating that only 31 percent of retail traders are long the pair. With the balance - nearly 70 percent of traders - net short, this is the most bearish SSI reading since January 21st of this year. Compared to that previous reading 9 months ago, USD/CAD finds itself 10 percent lower than the near-1.4700 peak.
This morning, Bank of Canada’s Governor Poloz called for greater monetary efforts as he noted that “headwinds pushing against stimulus remain powerful”. The Governor went on to say that Canada should remove interprovincial trade barriers as he sees potential output growth at an “uninspiring” 1.5 percent. During the Q&A portion of his speech, Governor Poloz stated that negative rates are a possisble tool for the BoC, however “nobody likes negative rates”.
The exceptional USD/CAD positoining and Canadian central banker’s call for greater monetary stimulus efforts comes just a day before the Federal Open Market Committee (FOMC) announces its decision on US interest rates and releases its updated forecasts. The FOMC meeting results may bring with it a significant amount of volatility as it is one of the most important pieces of event risk for the month.
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