US service data is coming
The US Services PMI will be out at 17:00 MT time on March 3.
How to trade ahead and after BOC report?
Information is not investment advice
The Canadian central bank will make a monetary policy report and announce interest rates on Wednesday, January 20, at 17:00 MT time. Also, the BOC press conference will be held later.
Instruments to trade: USD/CAD, CAD/JPY, EUR/CAD
On December 9, the Bank of Canada left the rate at a record low of 0.25% as it was expected. However, this time the central bank may cut rates but without going below zero. The BOC is unsatisfied with the too high Canadian dollar, and if the recent strength of the US dollar can’t be sustained, the bank may really impose rate cuts. According to BMO Capital Markets, if USD/CAD hits 1.2500, the BOC will lower rates from 0.25% to 0.10%. At the same time, BMO said "our human view on the pair is that it looks reasonably likely to make a run down to 1.2550 over the next few days, but that is where we suspect it is likely to get stuck." Anyway, follow the report and remember the rules below!
- If the bank cuts rates or expands its quantitative easing program, the CAD will drop, and USD/CAD will rise.
- If the BOC doesn’t make any changes, the CAD may move up, and USD/CAD – move down.
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