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
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bearish
More View more
Real Time News
  • 🇲🇽 Unemployment Rate (SEP) Actual: 5.1% Expected: 5.3% Previous: 5.2% https://www.dailyfx.com/economic-calendar#2020-10-21
  • 🇺🇸 MBA Mortgage Applications (16/OCT) Actual: -0.6% Previous: -0.7% https://www.dailyfx.com/economic-calendar#2020-10-21
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.67%, while traders in EUR/USD are at opposite extremes with 71.35%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/SuyI0wMhaq
  • Heads Up:🇺🇸 MBA Mortgage Applications (16/OCT) due at 11:00 GMT (15min) Previous: -0.7% https://www.dailyfx.com/economic-calendar#2020-10-21
  • Heads Up:🇲🇽 Unemployment Rate (SEP) due at 11:00 GMT (15min) Expected: 5.3% Previous: 5.2% https://www.dailyfx.com/economic-calendar#2020-10-21
  • The Spinning Top candlestick pattern forms part of the vast Japanese candlestick repertoire with its own distinct features. Gain a better understanding of the spinning top candlestick here: https://t.co/yXomAftdv8 https://t.co/GNUYwiesiM
  • Commodities Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Silver: 1.55% Gold: 0.60% Oil - US Crude: -1.26% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/zeXG8lHCy0
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.81% 🇳🇿NZD: 0.72% 🇯🇵JPY: 0.64% 🇨🇭CHF: 0.29% 🇪🇺EUR: 0.23% 🇨🇦CAD: 0.12% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/Au6kbo4WXL
  • Indices Update: As of 10:00, these are your best and worst performers based on the London trading schedule: US 500: 0.08% Wall Street: -0.00% Germany 30: -0.86% France 40: -1.12% FTSE 100: -1.32% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/pNZcZ7hQkI
  • Heads Up:💶 ECB Guindos Speech due at 10:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-10-21
BoC Set to Keep Rates on Hold For Now Amid NAFTA Uncertainty

BoC Set to Keep Rates on Hold For Now Amid NAFTA Uncertainty

2018-09-05 12:00:00
Justin McQueen, Analyst
Share:

CAD Analysis and Talking Points

  • BoC to Keep Rates at 1.50%
  • Focus on accompanying statement

The Bank of Canada will publish its latest interest rate decision at 1400GMT where the central bank is expected to maintain its policy rate at 1.50%, according to 19 out of the 20 surveyed economists (one calling for a 25bps hike). OIS (Overnight Index Swaps) markets also attach an 81% likelihood that the central bank will stand pat on interest rates. As such, focus will be on the accompanying monetary policy statement and whether the central bank provides a strong signal for another rate hike October, given that it is roughly 80% priced in.

BoC Set to Keep Rates on Hold For Now Amid NAFTA Uncertainty

Source: Thomson Reuters (BoC Interest Rate Expectations)

Positive Data Supports Additional Rate Hikes

Canadian data continues to support the view that additional rate hikes are necessary for the Canadian economy. Recent data showed that economic growth was at 2.9% for Q2, which was above the MPC’s forecast of 2.8%, alongside this, headline inflation is now at the top of the BoC’s 1-3% inflation target range. As such, it is likely that the BoC will remain upbeat regarding the Canadian economy.

Canadian Economic Data

Date

Latest

Expected

Verdict

CPI (June)

July 20th

2.5%

2.4%

Bullish

Retail Sales (May)

July 20th

2.2%

1.1%

Bullish

Core Retail Sales (May)

July 20th

1.7%

0.7%

Bullish

Trade Balance (Jun)

Aug 3rd

-0.63b

-2.3b

Bullish

Ivey PMI (Jul)

Aug 7th

56.7

65.1 (Prev.)

Bearish

Ivey PMI SA (Jul)

Aug 7th

61.8

63.1 (Prev.)

Bearish

Housing Starts (Jul)

Aug 9th

206.3k

219.5k

Bearish

Employment Change (Jul)

Aug 10th

54.1k

17k

Bullish

Unemployment Rate (Jul)

Aug 10th

5.8%

5.9%

Bullish

CPI (Jul)

Aug 17th

3%

2.5%

Bullish

Retail Sales (Jun)

Aug 22nd

-0.2%

-0.1%

Bearish

Core Retail Sales (Jun)

Aug 22nd

-0.1%

-0.1%

Neutral

GDP (Q2)

Aug 30th

2.9%

3%

Bearish

Source: DailyFX (UK Economic Data Since BoE’s May Meeting) *Please send feedback on table if helpful

NAFTA Presents Largest Risk

While economic data remains firms in Canada, a cause for concern for the Bank of Canada and the biggest risk to the economic outlook is the uncertainty on whether the US and Canada can forge a deal. Last week, both US and Canadian trade ministers had failed to reach an agreement in time, while President Trump had threatened to leave Canada out of NAFTA. Consequently, this may see the BoC deliver a somewhat cautious statement, which could see the Canadian Dollar falter as markets unwind bets for an October hike.

Trading the BoC

Given that market pricing is largely for an unchanged rate decision, the focus will be on the accompanying statement from the BoC. Market pricing for October is somewhat high at 80%, despite the uncertainty over NAFTA talks between the US and Canada with both nations failing to reach an agreement. As such, a cautious statement from the BoC highlighting the concerns over NAFTA could see a reduction in hawkish bets for October, which in turn could take USDCAD firm above 1.32. However, if the BoC remain upbeat given the healthy economic data and signal a rate move for October, this could see USDCAD revisit 1.31 yet again.

Option Pricing suggests that we could see some volatility over the event with vols indicating a break-even of 90pips.

USDCAD Price Chart: Daily Time-Frame (January-August-2018)

BoC Set to Keep Rates on Hold For Now Amid NAFTA Uncertainty

Chart by IG

Support: 1.3115(23.6% Fibonacci retracement), 1.31

Resistance: 1.3200, 1.3290 (July Highs), 1.33

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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

DISCLOSURES