Bank of Canada (BoC) Interest Rate Decision

[MongiIG]

The Bank of Canada will update its economic forecasts at a policy announcement later in the day (3PM UK Time), where the central bank is widely expected to announce further asset tapering.

The Canadian dollar held its biggest decline in a week ahead of the announcement, largely unchanged at C$1.2500 against its U.S. counterpart but weakening toward the two-and-a-half-month low of C$1.2590 reached during the previous week.

Other central banks will also hand down their policy decisions later in the week, with the Bank of Korea’s decision due on Thursday and the Bank of Japan’s decision due a day later.

 

By Gina Lee, 14th July 2021. Investing.com

[CharlotteIG]

CAD news: 

Markit Manufacturing PMI(Oct) 

Previous: 57

Estimate: 57.2

Actual: 57.7

[MongiIG]

In Canada, benchmark interest rate is set by the Bank of Canada's (BoC) Governing Council. The official interest rate is the Overnight Rate. Since 1996 the Bank Rate is set at the upper limit of an operating band for the money market overnight rate. Previously, from March 1980 until February 1996 the Bank Rate was set at 25 basis points above the weekly average tender rate for 3-month Treasury bills.

 

CAD news event: 

BoC Interest Rate Decision at 15:00 GMT, 8th Dec 2021.

Previous: 0.25%

Estimate: 0.25%

Actual: TBA at 15:00 (UK Time)

A reading that is weaker than forecast is generally supportive (bullish) for the CAD, while a stronger than forecast reading is generally negative (bearish) for the CAD. Source: investing.com

 

 

Let us know if you’ll be trading and what results you’re hoping for. Who will be trading?

Due to expected volatility guaranteed stop distances may be widened.

 

All the best - MongiIG

[MongiIG]

2 hours ago, MongiIG said:

In Canada, benchmark interest rate is set by the Bank of Canada's (BoC) Governing Council. The official interest rate is the Overnight Rate. Since 1996 the Bank Rate is set at the upper limit of an operating band for the money market overnight rate. Previously, from March 1980 until February 1996 the Bank Rate was set at 25 basis points above the weekly average tender rate for 3-month Treasury bills.

 

CAD news event: 

BoC Interest Rate Decision at 15:00 GMT, 8th Dec 2021.

Previous: 0.25%

Estimate: 0.25%

Actual: TBA at 15:00 (UK Time)

A reading that is weaker than forecast is generally supportive (bullish) for the CAD, while a stronger than forecast reading is generally negative (bearish) for the CAD. Source: investing.com

 

 

Let us know if you’ll be trading and what results you’re hoping for. Who will be trading?

Due to expected volatility guaranteed stop distances may be widened.

 

All the best - MongiIG

Bank of Canada Preview: How Will the Canadian Dollar (CAD) React?

 

USD/CAD, BOC Price Analysis & News

• CAD Reaction Dependent on Absorption of Economic Slack Assessment
• Risks are Geared Towards Disappointment Prompting a CAD Pullback

OVERVIEW: The Bank of Canada is expected to maintain its current monetary policy stance with the overnight rate to remain at 0.25%. The current stance from the BoC is that the policy rate will remain on hold until economic slack is absorbed, which is expected to happen sometime in the middle quarters of 2022. That said, while expectations over a possible Q1 rate rise has increased, with no monetary policy report until January, there is a risk of disappointment should the BoC maintain its current stance and not bring forward expectations that economic slack will be absorbed in Q1.

How to Trade Forex News: An Introduction

ECONOMIC DATA: While economic data has largely evolved as the Bank had anticipated, the main data point that has prompted an increase in BoC tightening bets had been the stellar labour market report, which crushed expectations with Canada appearing to move beyond full employment. However, the key focus is whether this is enough to lead to the BoC bringing forward the expected closure of economic slack to Q1, particularly in light of the new Omicron variant, which could see the BoC stick to its current stance.

Taking a look at the BoC’s MPR assumptions, the central bank based its assumptions on Brent and WTI at $80/bbl and $75/bbl respectively. In turn, with oil prices seeing a notable correction, this could somewhat temper the BoC’s optimistic message and thus provide another reason for sticking to its current stance.

MPR OCTOBER ASSUMPTIONS

Brent close to $80 (Currently $75)

WTI close to $75 (Currently $72)

WCS close to $65 (Currently $54)

MARKET REACTION: My view is that the BoC meeting is gearing up for a slight disappointment and thus will result in a slight pullback for the Canadian Dollar. The trigger will be the guidance surrounding the Bank’s assessment on when economic slack is expected to be absorbed. Therefore, given that money markets are pricing in five rate hikes throughout 2022 and surprisingly a slight chance of a hike at this meeting (14%), the bar has been set high to surprise on the hawkish side, however, a hawkish surprise can be achieved if the Bank sees slack absorbed in Q1. Although, with no new forecasts or press conference, I suspect the Bank maintains current guidance and thus the Loonie will come under initial short term pressure. Additionally, with CAD buying picking up into the meeting, market participants are leaning on the bullish side, which in turn could exacerbate the short term pullback. As it stands, the option implied move for USD/CAD is at 62pips, therefore, a disappointment would likely see the 1.2700 handle come into play. With that being said, risk appetite and oil prices are likely to have a bigger role in determining the trajectory for the Canadian Dollar in the longer term.

By Justin McQueen, Analyst, 8th December 2021. DailyFX

[MongiIG]

TORONTO, Dec 8 (Reuters) - The Bank of Canada on Wednesday held its key overnight interest rate at 0.25%, as expected, and maintained its guidance that a first hike could come as soon as April 2022.

[MongiIG]

The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank’s extraordinary forward guidance on the path for the overnight rate is being maintained. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds roughly constant.

Full press release: Bank of Canada