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Huddle up, news traders! We’ve got a couple of big ones comin’ our way this forex trading week, as the Bank of Canada (BOC) and the European Central Bank (ECB) are set to announce their monetary policy decisions. Here’s what you should watch out for during these statements.

Bank of Canada (Oct. 21, 2:00 pm GMT)

BOC head honcho Stephen Poloz and his gang of policymakers are expected to sit on their hands yet again, keeping interest rates unchanged at 0.50% for the time being.

The Canadian central bank has already cut interest rates twice this year in preemptive efforts to shield the economy from incoming headwinds, and it looks like there are no new ones on the horizon.

In my latest economic roundup for Canada, I’ve noted that the country’s manufacturing industry is in a rut as the September Ivey PMI posted a sharp drop from 58.0 to 53.7. Oil prices have been tossing and turning, still failing to make any significant headway and unable to spur stronger inflationary pressures.

To top it off, the labor market is still plagued by underlying weaknesses, as full-time employment and hiring in the natural resources sector are on the decline.

With that, BOC Governor Poloz might decide to add a few more cautious remarks in his official statement, highlighting the current challenges faced by the oil industry and the Canadian economy.

He might also comment on how the global economy and commodity prices might be affected by a potential interest rate hike from the U.S. central bank, although the odds of that happening have significantly dropped recently.

European Central Bank (Oct. 22, 11:45 am GMT)

Next up, we’ve got ECB Chairman Mario Draghi set to announce their policy decision on Thursday’s London trading session. No actual interest rate changes are expected as well, but forex market watchers are on the lookout for any easing hints.

In their previous rate statement, Super Mario admitted that they’re willing to increase their stimulus program in case inflationary pressures continue to weaken.

While he tried to downplay market expectations of more QE in his next speeches, the euro zone’s negative headline CPI reading for September had most forex traders pricing in the idea of further ECB easing.

To add fuel to the QE fire, data from Germany – the toughest country in the euro region – has been pretty shaky lately. Optimism has tanked, with the German ZEW economic sentiment index plummeting from 12.1 to 1.9 in October.

Industrial production has also been much worse than expected, as the latest report showed a 1.2% drop instead of the projected 0.3% uptick.

Forex Tips and Tricks

If you’re planning on trading the actual events, remember to make the necessary adjustments for additional volatility.

Don’t let your guard down in case the rate statement fails to spur a strong reaction, as the scheduled press conference around an hour after the announcement might trigger larger forex moves.

If you’re not comfortable keeping positions exposed to potentially wild price swings, you could wait for the initial reaction to fade then just hop in the follow-through.

Pay attention to how the market is reacting to the central bank rhetoric and try to interpret what the changes in wording could imply for future monetary policy action.

Lastly, stay on the lookout for likely “buy the rumor, sell the news” scenarios, as most forex junkies have been pricing in expectations for these central bank events.

EUR/CAD might offer good trading opportunities should the policy biases diverge, but it looks like both central banks might be donning their dovish feathers. If you’re looking for neat technical forex setups, do check out Pipcrawler’s EUR/USD short trade idea or Happy Pip’s long-term NZD/CAD play. Good luck!