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The BOC is up this week!

Will the event inspire one-directional moves for the Loonie? Or will the comdoll take cues from its counterparts again?

I’ve listed the potential catalysts you need to watch if you’re trading the Canadian dollar this week!

Inflation numbers (Jan 20, 1:30 pm GMT)

  • Annual prices rose by 1.0% in November, the fastest since February, while core price increase also speeded up from 1.0% to 1.5%
  • Monthly consumer price increase slowed down from 0.4% to 0.1% though core prices
  • A lack of fresh action from the U.S. FOMC boosted the dollar and weighed on CAD despite the strong price increases
  • Analysts see monthly and annual inflation maintaining their 0.1% and 1.0% growth rates respectively
  • Core inflation rate could dip slightly to 1.4%
  • Note that the report will be printed less than two hours before the BOC publishes its statement

BOC’s policy decision (Jan 20, 3:00 pm GMT)

  • As expected, the Bank of Canada (BOC) kept its interest rates and the pace of its bond-buying steady in December
  • The central bank noted that “considerable” economic slack could weigh on prices “for the foreseeable future”
  • Recent lockdowns in Quebec and Ontario are expected to balance out vaccine optimism, so most traders don’t see the BOC making policy changes this week
  • Governor Macklem’s references of a “lower floor,” however, have inspired some traders to expect a “micro cut” of 0.10% to 0.15%
  • Conflicting opinions could make for a volatile trading session for Loonie traders

Retail sales (Jan 22, 1:30 pm GMT)

  • Retail activity rose by 0.4% in October and marked the sixth consecutive monthly increase
  • CAD still lost pips against its counterparts as traders focused more on the absence of a Brexit deal in the U.K. and stimulus deal in the U.S. before the week ended
  • Markets expect retail sales to edge down to 0.1% in November
  • Annual retail numbers could weaken from 7.5% to 6.9%

Technical snapshot

  • Stochastic is flagging CAD’s overbought condition against NZD, CHF, and EUR
  • GBP/CAD is still in neutral territory on the daily time frame
CAD Forex Pairs Stochastic from MarketMilk
CAD Forex Pairs Stochastic from MarketMilk
  • EMAs reflect the Loonie’s short and long-term bearish trends against the pound
  • CAD may soon see a stronger uptrend against EUR
  • Watch out for retracement or reversal opportunities on USD/CAD, CAD/JPY, and NZD/CAD
CAD Forex Pairs EMAs from MarketMilk
CAD Forex Pairs EMAs from MarketMilk
  • The Loonie saw the most volatility against the safe-havens and the Kiwi in the last seven days
CAD Forex Pairs Volatility from MarketMilk
CAD Forex Pairs Volatility from MarketMilk

Missed last week’s price action? Read CAD’s price recap for Jan. 11 – 15!