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
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Bullish
GBP/USD
Bearish
USD/JPY
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
More View more
Real Time News
  • Forex Update: As of 11:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.17% 🇨🇦CAD: 0.16% 🇦🇺AUD: -0.05% 🇳🇿NZD: -0.11% 🇨🇭CHF: -0.17% 🇯🇵JPY: -0.25% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/gbOKCTOkIE
  • Make smart trading decisions with your free guide to trade the news. Download your free guide here.https://t.co/pb5E2KgRzW #DailyFXGuides https://t.co/LLkrZwdTae
  • Indices Update: As of 11:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.90% FTSE 100: 0.80% France 40: 0.76% Wall Street: 0.67% US 500: 0.61% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/GbHvaz35ZV
  • ECB's Weidmann says the ECB can flexibly adjust PEPP purchase pace $EUR
  • The bull flag pattern is a great pattern to add to a forex trader's technical arsenal. Explosive moves are often associated with the bull flag. Learn more about the bull flag pattern here: https://t.co/yOEvLjKnct https://t.co/o8wSmAUaQM
  • Bundesbank says German HICP will exceed 3% by year-end but only temporarily
  • Briefly lifting Euro above 1.21 https://t.co/oROMtbKqjT
  • ECB see no need for drastic action to curb bond yields $EUR
  • 🇬🇧 Markit/CIPS Composite PMI Final (FEB) Actual: 49.6 Expected: 49.8 Previous: 41.2 https://www.dailyfx.com/economic-calendar#2021-03-03
  • 🇬🇧 Markit/CIPS UK Services PMI Final (FEB) Actual: 49.5 Expected: 49.7 Previous: 39.5 https://www.dailyfx.com/economic-calendar#2021-03-03
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, Analyst

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