BoC policy decision looms – Scotiabank

The Canadian Dollar (CAD) is soft, but little changed on the session, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD on the cusp of a push through 1.42

“The Bank of Canada is widely expected to sanction the 1/2-point rate cut that markets have priced in for today’s policy decision (9.45ET). There is no MPR update but the usual post-decision press conference (Governor Macklem and Senior DG Rogers) will follow at 10.30ET.”

“A 50bps cut in the Overnight Rate to 3.25% will leave the policy rate around the upper range limit of neutral policy but the bank is likely to leave the door open to further easing ahead. Given that a 50bps rate cut is more or less fully priced in, the CAD may stage a mini, shortcovering rebound on the news. Scope for gains is limited though and the USD’s reaction to this morning US CPI data may further complicate the CAD’s response to the expected BoC easing.”

“Short-term price signals suggest some mild USD selling pressure against the overnight highs in funds but the underlying trend remains USD-bullish and there is scant sign that the positive USD trend is poised to reverse. Rather, USD-bullish trend dynamics across the intraday, daily and weekly oscillators suggest the USD bull trend will persist and extend. Support is 1.4125/35. Resistance is— minor, psychological—at 1.42.”