The Bank of Canada will announce its monetary policy today. As reported by economists ENGa 50 basis point rise would likely trigger a rise in CADbut the reaction of the currency market should be short-lived.
Not many long-term implications for CAD
“Consensus is split between a 25 basis point and a 50 basis point rise, but we think a half point move looks more appropriate given strong economic activity and a very tight labor market. Still, we concede that this is a Very tight decision, given that the expected economic slowdown and the fragility of the Canadian real estate market call for a lower rate increase.”
“In our base case of 50 basis points, the Canadian dollar should recover after the hawkish surprise. However, we do not believe that the impact of the BoC on the CAD will be very lastingas external factors continue to be more important.”
“A sustained recovery of the CAD from these levels will undoubtedly require a rebound or at least a stabilization of oil prices.. Today, USD/CAD could return below 1.3600, but near-term upside risks remain elevated.”
See: Bank of Canada Preview: The end of the tightening cycle is just around the corner
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
