USD / CAD - Canadian Dollar Counting Down To Boc Meeting| MENAFN.COM

Monday, 06 February 2023 06:08 GMT

USD / CAD - Canadian Dollar Counting Down To Boc Meeting


(MENAFN- Baystreet.ca) USD / CAD - Canadian dollar counting down to BoC meeting


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- Bank of Canada expected to hike rates 25 bps today
- Wall Street in drivers' seat for FX
- US dollar opens with mixed after another quiet overnight session
USDCAD snapshot: open 1.3378-82, overnight range 1.3346-1.3383, close 1.3368, WTI $80.00, Gold $1925.56
The Canadian dollar is little changed from yesterday with traders' content to sit on the sidelines until the BoC meeting. The statement and quarterly Monetary Policy Report are released at 10:00 am then at 11:00 am Governor Macklem will explain the rationale behind the decision.
The key risk for the Canadian dollar today is if the BoC leaves rates unchanged. If so, much of the market will be surprised and the Canadian dollar would sink.
The argument for pausing rates has merit. The BoC has hike rates by 400 bps since March. The Governor and Deputy Governors have stressed that the impact of rate hikes on the economy can lag between one and two years. Inflation, while still above target, is showing evidence that the peak has been seen, which means the BoC can easily justify pausing increases.
Lunar New Year holidays in Asia, quarterly earnings reports and a lack of top-tier economic data from the US ahead of next week's FOMC meeting has led to a subdued trading session overnight.
EURUSD is at the bottom of its 1.0658-1.0910 overnight range despite a somewhat upbeat German Ifo report. The Business Climate Index rose to 90.2 points in January (previous 88.6), Expectations rose 86.4 (previous 83.2) and Current Assessment was 94.1) previous 94.4).
Nevertheless, the short term EURUSD technicals are bullish above 1.0790.
GBPUSD traded 1.2285-1.2338 range. Prices recouped losses following the UK PPI report and a warning of a weaker currency from economists at Commerzbank.
USDJPY is trading at the bottom of its 129.67-130.58 range. NY. BoJ Governor Kuroda continues to trumpet the need for dovish monetary policy but traders believe things will change when Mr Kuroda retires in April.
AUDUSD rallied 0.7434 to 0.7124 after inflation surged in December. CPI rose 8.4% y/y compared to 7.3% y/y in November which some analysts believe, means higher rates for longer.
The US data calendar is empty.













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