When is the BoC monetary policy decision and how could it affect USD/CAD? – by hareshmenghani BOC InterestRate USDCAD Majors Currencies
that if economic developments evolve broadly in line with the outlook, Governing Council expects to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases. Having raised interest rates eight times since the first quarter of 2022, the BoC is now expected to leave the overnight rate unchanged at 4.5%. Investors will further take cues from the accompanying monetary policy statement in the absence of the post-meeting press conference.
Analysts at TD Securities offer a brief preview of the event and write: “The downside surprise on Q4 GDP should allow the BoC to look past the blockbuster January jobs number and keep the overnight rate unchanged at 4.50%. The forward guidance is not expected to change too much from January, though the BoC might want to put more emphasis on the conditional nature of its pause.
From a technical perspective, the overnight sustained strength beyond the 1.3700 mark was seen as a fresh trigger for bullish traders. That said, the Relative Strength Index on the daily chart is on the verge of breaking into the overbought territory. This makes it prudent to wait for some near-term consolidation or a modest pullback before positioning for any further appreciating move.
The USD/CAD pair, however, still seems poised to prolong the upward trajectory towards reclaiming the 1.3800 round figure. The momentum could get extended further towards an intermediate hurdle near the 1.3870-1.3880 region en route to the 1.3900 mark and the 2022 swing high, around the 1.3975-1.3980 zone.
On the flip side, the 1.3700 strong resistance breakpoint now seems to protect the immediate downside. Any subsequent pullback is more likely to attract fresh buyers and remain limited near the 1.3655-1.3650 region. The latter should act as a strong base for the USD/CAD pair.
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