Canadian Dollar Appreciates Ahead of BoC’s Interest Rate Decision, 50+ PIP Volatility Likely In CAD Parity; Jan 20, 2021

Bank of Canada’s Interest Rate Decision

Bank of Canada will release key interest rate decision at 1500 GMT/2030 IST. It is important to note here that BoC has kept interest rate unchanged at 0.25 pct since March 27, 2020. Today also markets expect interest rate to remain unchanged but focus shifts to the tone of the BoC’s governor during Press Conference. Will it be hawkish or dovish? 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. In addition, BoC’s rate statement discusses the economic outlook and offers clues on the outcome of future decision.

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

Dec 09:

Oct 28:

Technical View:

USD/CAD: The Canadian Dollar strengthens sharply ahead of BoC’s interest rate decision. The pair made intraday high at 1.2737 and low at 1.2690 mark. A sustained close below 1.2672 will check key supports 1.2625, 1.2587 and 1.2540 mark respectively. Alternatively, reversal from this will tests key resistances at 1.2751, 1.2812 and 1.2853 mark respectively.

Take a look and do trade wisely!
Good Luck