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Monetary policy biases play a very important role in determining longer-term forex price trends, with any changes in rhetoric usually yielding plenty of profit opportunities. Are we seeing this in the latest rate statements from the ECB and BOC?

European Central Bank

This started off as a seemingly run-of-the-mill economic event, as most forex market watchers weren’t expecting anything new from ECB Governor Draghi and his men. When suddenly…

A wild protester appeared!

ecb protestWhile the confetti-filled ruckus wasn’t enough to shock Draghi (or to “End the ECB Dictatorship!”), the headline-grabbing incident led more euro traders to pay closer attention to the press conference. At the end of the day, the ECB head maintained that the ongoing quantitative easing program is set to carry on even if they are already seeing a few positive developments in the region.

In particular, Draghi mentioned that the ECB will continue to pump more euros into the economy through bond purchases until September 2016. He also clarified that, contrary to what some sources are suggesting, there is no shortage of eligible government bonds to be purchased.

Draghi didn’t have much to say about the region’s problem child, Greece, though. He simply stated that it’s up to the new government to implement the reforms needed to end its debt drama.

Bank of Canada

No confetti was needed to get the Loonie bulls’ party started during the BOC policy statement, as Governor Stephen Poloz dropped some hawkish beats that day. Even though policymakers admitted that economic growth has stalled due to the oil price slump, they also hinted that they’re not likely to implement another surprise interest rate cut anytime soon.

In fact, Poloz mentioned that Canada might see improvements in exports, investment, and hiring later on this year. With that, the GDP forecasts for Q2 and Q3 this year were upgraded to 1.8% and 2.8% respectively while inflation estimates were revised higher as well.

It seems that the BOC head placed so much emphasis on the potential recovery in the next few months that Loonie traders just shrugged off the central bank’s decision to downgrade their Q1 growth estimate from 1.5% to 0%. Then again, the tumble in oil prices is probably old news to a lot of forex traders already that majority are more interested to find out whether a recovery is underway or not.

In a nutshell, both policy statements weren’t as dovish as they used to be, although the BOC’s announcement was the more upbeat one. Anybody catch that sick EUR/CAD 200-pip drop that day?