Central bank expectations boosted the Loonie to the top last week. Will the BOC deliver what markets are expecting this week?
Here are events you should watch out for if you’re planning on trading the Canadian dollar:
BOC’s statement (Oct 30, 2:00 pm GMT)
Later this week the Bank of Canada (BOC) is expected to keep its benchmark rates steady at 1.75% for another month in October.
Word around is that relatively strong domestic data and expectations of steady (or even stimulative) fiscal policies after last week’s elections are enough to keep the doves at bay…for now.
In an environment where major central banks seem on a race to cut their rates as quickly as possible, expectations of steady rates will go a long way at boosting a currency.
Will BOC members maintain their non-dovish stance this week? Take note that BOC will also be releasing a quarterly report at the same time as the statement, and that a presser will follow an hour later. If Governor Poloz and his team have pressing concerns about the economy, we’ll likely hear them this week.
Another thing to keep in mind is that traders have likely priced in BOC’s lack of dovishness. This means that we could see a buy-the-rumor, sell-the-news situation, or that dovish comments would have more impact on the Loonie’s price action than optimistic statements.
Oh, and did you catch that BOC will do its thing just HOURS before the Fed is expected to cut its rates? Make sure you manage your risks well if you’re planning on trading BOC’s event!
Market risk appetitePost-election cheer, BOC possibly keeping its rates steady, and a bit of risk appetite jumpstarted the Loonie against its peers last week. Can the bulls maintain their momentum this week?
A ton of top-tier reports from other major economies means tons of chances for last week’s risk-takers to take profits. Oh, and keep an eye out for Brexit-related updates so close to the October 31 deadline.
Central bank events and Uncle Sam’s NFP release could also affect market sentiment. Dovish announcements from BOJ or the Fed could highlight the divergence between BOC and the rest of the major central banks, while weaker-than-expected NFP readings could point to weak economic prospects for the world’s largest economy.
Last but not the least is crude oil price moves, which could see profit-taking from last week’s rallies.