News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
Bearish
More View more
Real Time News
  • The Indian Rupee may weaken following a breakout higher in USD/INR. Despite rising global stock market volatility, the Nifty 50 has been holding its ground. Could it capitulate lower? Find out from @ddubrovskyFX here:https://t.co/BNJ5uTKz1A https://t.co/x0YxwlKWaR
  • Relief rally ahead for $AUDNZD? Bullish RSI divergence at key psychological support (1.0600) suggests a rebound back towards the 21-MA (1.0626) and 50-MA (1.0659) could be on the cards Conversely, a break below 1.0590 probably opens the door for further losses. $AUD $NZD https://t.co/1zUvYXyLBh
  • WTI Crude Oil fell to a fresh four-month-low this morning. This fresh low broke through range support that’s held for the better part of two months. Get your #crudeoil technical analysis from @JStanleyFX here: https://t.co/UMeWEIrTSh https://t.co/a3Ujc3Rf2z
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: -0.02% 🇳🇿NZD: -0.16% 🇦🇺AUD: -0.25% 🇬🇧GBP: -0.42% 🇨🇭CHF: -0.59% 🇪🇺EUR: -0.62% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/vspt9gv2qH
  • Nasdaq futures pivot sharply lower in the wake of earnings from $AMZN, $GOOGL, $FB and $AAPL, which comprise over 35% of the tech-heavy index collectively. $NQ_F $NDX still trading positive on the day. https://t.co/w5yqbxsqjb https://t.co/4jxdwQY8yo
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: -0.13% Silver: -0.55% Gold: -0.57% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/Lgi1Jei5qJ
  • Apple earnings: EPS $0.73 vs $0.71 est Revenue $64.70B vs est $63.47B $AAPL
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.31%, while traders in NZD/USD are at opposite extremes with 66.78%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/k2e06fEjoh
  • ECB Pre-Commits to More Stimulus: ECB’s Lagarde had stated that the GC were in agreement that given the current backdrop, risks were clearly tilted to the downside. Get your market update from @JMcQueenFX here:https://t.co/KPjoDcQ0D0 https://t.co/vV1nprDCKL
  • Watch @PeterHanksFX, @DailyFX Equity Analyst covering the Earnings live - https://t.co/cpf5s3UvUn
UPDATE: USD/CAD Reverses Losses as BOC Reveals Dovish Intentions

UPDATE: USD/CAD Reverses Losses as BOC Reveals Dovish Intentions

2016-10-19 15:40:00
Christopher Vecchio, CFA, Senior Strategist
Share:

Update (10/19/16 at 15:40 GMT)

Bank of Canada Stephen Poloz is speaking at the post-rate decision press conference and has unleashed a wave of dovish commentary that has pushed back against post-decision CAD strength.

Of note, BOC Governor Poloz said, "Given the downgrade to our outlook, Governing Council actively discussed the possibility of adding more monetary stimulus at this time..." It would then appear that the market was underpricing the possibility of a rate cut substantially, with overnight index swaps only pricing in a 1.9% chance of a 25-bps rate cut today (Governor Poloz's comments would indicate it was a lot closer than that).

Here's how USD/CAD is reacting between the rate decision release and the Poloz press conference:

Chart 2: USD/CAD 1-minute Chart (October 19, 2016 Intraday)

UPDATE: USD/CAD Reverses Losses as BOC Reveals Dovish Intentions

Talking Points: (Originally posted on 10/19/16 at 14:34 GMT)

- Bank of Canada cuts 2016, 2017 CPI and GDP forecasts; cuts weren’t as deep as markets expected.

- USD/CAD dives from near C$1.3110 to near C$1.3030 in minutes after rate decision.

- See the DailyFX Economic Calendar for Wednesday, October 19, 2016.

The Bank of Canada’s rate decision has produced a little bit more excitement than markets may have been anticipating ahead of time, sending USD/CAD to fresh session lows on the day. As expected, the BOC kept its main rate on hold at 0.50%. Although interest rate markets weren’t pricing in any expectation of action one way or the other – there was a 98.1% chance of a hold and a 1.9% chance of a 25-bps, according to overnight index swaps – conversation among market participants and economists beforehand differed. The question among market observers was: to what degree will the Bank of Canada downgrade its economic forecasts?

Or, as Currency Analyst James Stanley aptly put it, “How Dovish Might the Bank of Canada’s Forecasts Be?” As it turns out, the Bank of Canada’s downgrades to its CPI and GDP estimates, in conjunction with its observations on the Canadian economy and financial climate, were still more optimistic than market participants were expecting, as evidenced by the turn lower in USD/CAD.

Despite the CPI and GDP downgrades (see below for details), the Bank of Canada in its policy statement said, “After incorporating these weaker elements, Canada’s economy is still expected to grow at a rate above potential starting in the second half of 2016…the Bank considers the risks around its update inflation outlook to be roughly balanced, albeit in a context of heightened uncertainty. Meanwhile the new housing measures should mitigate the risks to the financial system over time.” This is a hawkish tone in what appears to be a superficially dovish statement.

Here are the 2016 and 2017 CPI and GDP forecast that the Bank of Canada downgraded today:

  • 2016 CPI: +1.5% (from +1.6%) | 2016 GDP: +1.1% (from +1.3%)
  • 2017 CPI: +1.9% (from +2.1%) | 2017 GDP: +2% (from +2.2%)

See the DailyFX economic calendar for Wednesday, October 19, 2016

Chart 1: USD/CAD 1-minute Chart (October 19, 2016 Intraday)

UPDATE: USD/CAD Reverses Losses as BOC Reveals Dovish Intentions

Following the release of the rate decision and policy statement, USD/CAD immediately traded lower from C$1.3112 to as low as C$1.3028 at the time this report was written.

Read more: Watch Oil’s Next Move (Implications for USD/CAD)

--- Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES