BoC Monetary Policy Decision – Overview
The Bank of Canada (BoC) is expected to announce its latest monetary policy update at 2:00 p.m. GMT on Wednesday. The BoC is expected to largely maintain the status quo and leave its benchmark interest rates unchanged at 0.25% at the end of the June policy meeting, marking the first working day of new Governor Tiff Macklem. Therefore, the focus will be on the accompanying monetary policy statement, where investors will look for clues to setting negative rates and the possibilities for additional bond purchases.
How could this affect the USD / CAD?
Faced with the risk of a key event, the USD / CAD pair recorded a satisfactory intraday rebound near the very important 200-day SMA support. An accommodating tone would send the loonie significantly lower and cause an aggressive short cover movement around the major. Conversely, optimistic economic prospects could make the pair vulnerable to extend its recent downward trajectory.
Meanwhile, any significant recovery beyond the immediate resistance of 1.3570-80, leading to a further move beyond the 1.3600 bar seems more likely to face a new supply and remain capped. around the middle of 1.3600. On the other hand, the key psychological mark of 1.3500 now seems to protect the immediate setback, below which the pair could further accelerate the fall towards the 1.3460 (200-DMA) region.
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About the BoC interest rate decision
The BoC’s interest rate decision is announced by the Bank of Canada. If the BoC is hawkish about the inflationary outlook for the economy and increases interest rates, it is positive, or bullish, for the CAD. Similarly, if the BoC has an accommodating vision of the Canadian economy and keeps the current interest rate, or reduces the interest rate, it is considered to be negative or bearish.