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. See our updated Privacy Policy here.

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
Subscribe
Please try again
GBP/USD
Bearish
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
More View more
Real Time News
  • - Unreal atmosphere - Shame about the result, but no complaints - Usyk masterclass - Heavyweight division blown wide open https://t.co/BKCLJTDk9h
  • The USD could still rally a bit from here, but has resistance not far ahead that it will need to overcome if it is to extend to a larger degree. Get your weekly $USD technical forecast from @PaulRobinsonFX here: https://t.co/n0CVWWOJDe https://t.co/0uLjsQ2gwM
  • When it comes to buying and selling forex, traders have unique styles and approaches. Learn about buying and selling forex here: https://t.co/D8DXSAdpqC https://t.co/nfiFAlyYXv
  • Slippage can be a common occurrence in forex trading but is often misunderstood. Understanding how forex slippage occurs can enable a trader to minimize negative slippage, while potentially maximizing positive slippage. Learn about FX slippage here: https://t.co/Blrl0unrdT https://t.co/mIsVJ4zTbB
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePTpzSI https://t.co/hymrumanUY
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfs2Iz https://t.co/6dAqxsVfxJ
  • The results of this weekend’s German Federal Election will likely dominate Euro sentiment at the start of the week ahead but after a possible EUR/USD bounce they will have little long-term impact. Get your weekly $EUR forecast from @MartinSEssex here: https://t.co/Xu3ZT7EtrW https://t.co/5VHKn52MaA
  • The Consumer Price Index, better known by the acronym CPI, is an important economic indicator released on a regular basis by major economies to give a timely glimpse into current growth and inflation levels. Learn how to better understand CPI here: https://t.co/nAa0fHq4Np https://t.co/mf9rsmIvaW
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/mYWO0Eta0P
  • Sterling continues to contract into trend extremes and the focus is on a pending breakout in the weeks ahead. Get your weekly $GBP technical forecast from @MBForex here: https://t.co/ZvEMQuFjSs https://t.co/rMmq9cehnY
CAD Outlook: BoC to Stand Pat, However, May Signal Concerns Over Oil Plunge

CAD Outlook: BoC to Stand Pat, However, May Signal Concerns Over Oil Plunge

Justin McQueen, Strategist

CAD Analysis and Talking Points

  • BoC to Keep Rates at 1.75%
  • Focus on accompanying statement

The Bank of Canada will publish its latest interest rate decision at 1500GMT where the central bank is expected to maintain its policy rate at 1.75%, according to OIS (Overnight Index Swaps) markets which attach a 94% likelihood that the central bank will stand pat on interest rates. As such, focus will be on the accompanying monetary policy statement.

CAD Outlook: BoC to Stand Pat, However, May Signal Concerns Over Oil Plunge

Source: Refinitiv (BoC Interest Rate Expectations)

Data continues to warrant further rate hikes

Since the October 24th meeting, the majority of key Canadian data has surprised to the upside, which in turn suggests that further rate hikes are warranted and will likely be reiterated by the Bank of Canada are looking to raise interest rates to neutral as soon as possible. However, one cause of concern has been the unprecedented decline in oil prices, which has increased the downside risks to CAD and the BoC’s economic forecasts.

As a reminder, the Bank of Canada’s MPR forecasts had been based on these oil assumptions.

  • Brent crude close to $80 ($61.60)
  • WTI close to $70 ($53.40)
  • WCS close to $35 ($28.25)

Canadian Economic Data

Date

Latest

Expected

Verdict

Employment Change (Jul)

Nov 2nd

11.2k

10k

Bullish

Unemployment Rate (Jul)

Nov 2nd

5.8%

5.9%

Bullish

Ivey PMI (Oct)

Nov 7th

64.6

56.5 (Prev.)

Bullish

Ivey PMI SA (Oct)

Nov 7th

61.8

50.4 (Prev.)

Bullish

CPI (Oct)

Nov 23rd

2.4%

2.2%

Bullish

CPI (BoC Measure)

Nov 23rd

2.0%

2.0%

Neutral

Retail Sales (Sep)

Nov 23rd

0.2%

0.1%

Bullish

Core Retail Sales (Sep)

Nov 23rd

0.1%

0.3%

Bearish

GDP M/M (Sep)

Nov 30th

-0.1%

0.1%

Bearish

Markit Manufacturing PMI

Dec 3rd

54.9

53.9 (Prev.)

Bullish

Source: DailyFX (Canadian Data Since BoC’s October Meeting)

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 January remains elevated at 62.5%. However, pricing has moderated slightly given the sell-off in oil markets, alongside rising concerns of deteriorating global growth. As such, a cautious statement from the BoC highlighting global growth concerns could see rate hike bet recede for January, which in turn could take USDCAD back above 1.33. However, if the BoC remain upbeat given the relatively robust economic data, this could see USDCAD revisit 1.32.

Option Pricing suggests that we could see some volatility over the event with vols indicating a break-even of 84pips.

USDCAD Price Chart: Daily Time-Frame (Dec 2017-Dec-2018)

CAD Outlook: BoC to Stand Pat, However, May Signal Concerns Over Oil Plunge

Chart by IG

--- 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