CAD: BoC policy decision looming – Scotiabank

The Canadian Dollar (CAD) is weak, but little changed on the session, notes Shaun Osborne, Chief FX Strategist at Scotiabank.

CAD on the brink of a push through 1.42

“The Bank of Canada is widely expected to sanction the 1/2 point rate cut that markets have priced in for today’s policy decision (9.45ET). No MPR update, but the usual post-survey press conference The decision (Governor Macklem and Senior Deputy Governor Rogers) will follow at 10:30 ET.”

“A 50 basis point cut in the overnight interest rate to 3.25% will leave the policy rate around the upper end of the neutral policy range, but the bank is likely to leave the door open for further easing in the future. Given That a 50 basis point rate cut is more or less fully priced in, the CAD could stage a mini short-covering bounce on the news. However, the room for profit is limited and the USD’s reaction to the data. CPI of “This morning’s US may further complicate the DAC’s response to the BoC’s expected relief.”

“Short-term price signals suggest mild selling pressure on the USD against overnight highs in bottoms, but the underlying trend remains bullish for the USD and there are few signs that the USD’s positive trend is about to reverse. Rather, the USD uptrend dynamics on the intraday, daily and weekly oscillators suggest that the USD uptrend will persist and extend. Support is 1.4125/35. Resistance is—minor, psychological—at. 1.42.”