CANADIAN DOLLAR PRICE OUTLOOK: USD/CAD EYES BOC RATE DECISION DUEThe Canadian Greenback faces high-impact occasion danger with the BoC fee choice
CANADIAN DOLLAR PRICE OUTLOOK: USD/CAD EYES BOC RATE DECISION DUE
- The Canadian Greenback faces high-impact occasion danger with the BoC fee choice due
- USD/CAD value motion may pivot decrease if the Financial institution of Canada tapers QE additional
- Language on the output hole, fee hike steerage may additionally weigh on the Loonie
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The Canadian Greenback traded blended towards key FX friends throughout Tuesday’s session. Loonie energy was seen relative to the Euro with EUR/CAD shedding 33-pips on the day. This probably tracked the rise in crude oil costs. Canadian Greenback weak point versus the US Greenback offset this, nonetheless, as USD/CAD value motion ripped 61-pips greater within the wake of red-hot inflation knowledge.
Looking forward to Wednesday’s buying and selling session, we may get higher readability within the financial coverage replace anticipated from the Financial institution of Canada for the place the Loonie would possibly transfer subsequent. Excessive-impact occasion danger posed by the upcoming BoC fee choice due 14 July at 14:00 GMT is mirrored by nonetheless elevated implied volatility readings for USD/CAD.
USD/CAD PRICE CHART: DAILY TIME FRAME (15 MARCH TO 13 JULY 2021)
Chart by @RichDvorakFX created utilizing TradingView
As beforehand famous in my weekly Canadian Greenback forecast, the upcoming Financial institution of Canada fee choice will probably be in the direction of the highest of my radar this week with the BoC poised to additional taper its asset buy program. Slowing QE by greater than $1-billion from the present tempo of $3-billion may see a bullish response by the Canadian Greenback. So too may bringing ahead expectations for the liftoff of rates of interest.
As issues stand, markets are at present pricing in 4 0.25% fee hikes from the Financial institution of Canada over the subsequent two years with the primary anticipated earlier than the tip of 2022. On the opposite hand, tapering its asset buy program by lower than $1-billion would possibly disappoint BoC hawks and Canadian Greenback bulls. Cautious outlook from the Financial institution of Canada, maybe justified by financial exercise undershooting projections supplied in April, may equally spark broad-based Canadian Greenback promoting strain.
Preserve Studying – Canadian Greenback Forecast: USD/CAD Breakout Eyes Pivotal Resistance
— Written by Wealthy Dvorak, Analyst for DailyFX.com
Join with @RichDvorakFX on Twitter for real-time market perception
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