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CAD Rises Sharply Ahead of BoC’s Interest Rate Decision, 50+ PIP Volatility Likely in CAD Parity; March 02, 2022

Bank of Canada’s Interest Rate Decision

Today Bank of Canada will come up with the Policy Rate Decision at 1500 GMT/2030 IST. The rate decision is usually priced into the market, so it tends to be overshadowed by the BOC Rate Statement, which is focused on the future. Short term interest rates are the paramount factor in currency valuation – traders look at most other indicators merely to predict how rates will change in the future.

Traders are expecting Rate hikes by 25bp from this week only. In addition, Bank of Canada is likely to announce introduction part of its plan to minimize holdings of government bonds acquired over the past two years. Markets expect a total of six hikes over the next 12 months. Apart from it, Updated Inflation, Employment targets, Revised GDP targets and Currency valuation will also remain in focus. Let’s wait for the BoC’s Monetary Policy Statement and how accurately we get forecasts from it.

Let’s see how CAD has reacted during the previous data release:

Jan 26:

Dec 08:

Technical View:

USD/CAD:

  • The CAD appreciates noticeably ahead of Bank of Canada’s Interest Rate decision and slips below 1.2700 mark.
  • Pair made intraday high at 1.2744 and low at 1.2689 mark.
  • Today a day chart is up and H1 chart with triple EMA suggests down trend for the time being.
  • A sustained close above 1.2715 on H1 chart requires for the upside rally.
  • Alternatively, a consistent close below 1.2680 on H1 chart will check key supports too.
Supports
Resistances
1.2680
1.2715
1.2654
1.2750
1.2612
1.2772
1.2586
1.2799
1.2560
1.2830

 
Take a look and do trade wisely!
Good Luck

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