The BOC is up this week! What are traders expecting from the central bank? More importantly, how might the Loonie react?
Here are potential catalysts for the comdoll this week:
BOC’s policy decision (Jul 10, 10:00 am GMT)
As expected, the Bank of Canada (BOC) left its interest rates unchanged at 1.75% in May.
The official statement told us that members were happy enough with the economic pickup that a recovering oil sector and stabilizing housing sector brought. They also saw weaknesses in the labor market as “temporary,” and that inflation is “in line with the Bank’s April projection.”
Overall, market bulls cheered BOC’s optimism despite its concerns that “recent escalation of trade conflicts is heightening uncertainty about economic prospects.” The Loonie traded higher against its counterparts and stalled its intraweek downtrend.
This week analysts see the central bank maintaining its rates steady for another month in June. But that’s not the main reason why you should watch BOC’s event.
You should watch it because the central bank will also be printing its quarterly monetary policy report. Market geeks believe that BOC will upgrade Q2 2019’s growth forecasts, and maybe even nudge the year’s estimates higher.
Oh, and there’s a presser during the release, too! Members can clear up any blurred lines markets may perceive in the statement. Governor Poloz has to be careful, though. If he sounds too hawkish, then he might risk highlighting the Loonie’s advantage over its other counterparts and making Canada’s exports more expensive.
The last but definitely not the least thing you have to note is that the Fed is printing its meeting minutes only hours after the BOC’s statement is printed. That means y’all gotta be ready to switch biases in case the Fed has more new and interesting things to say than the BOC!
Missed last week’s price action? Read CAD’s price recap for July 1 – 5!