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SpanishCanadian dollar Appreciates sharply ahead of BOC’s Cash Rate Decision, 50+ PIP Volatility Likely; June 9, 2021
Bank of Canada’s Interest Rate Decision
The key event for the day will be Bank of Canada’s Interest Rate Decision. 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. 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.
Markets expect today’s meeting is likely to be uneventful. Canada is putting higher emphasis on vaccination to get the economy back on the track. Traders expect more tapering at the July meeting only. During the last BOC’s meet, the key data piece was the tapering of the quantitative easing program of the bank via a downward adjustment of the size of its asset purchases from C$ 4billion to C$3billion. In a hawkish attitude, the BoC also noted that economic conditions could allow for a potential rate hike in the lower half of 2022. During last meet, CAD strengthened sharply against major peers and gave 100+ pips volatility. Let’s see what BOC brings to the market today.
Let’s see how CAD has reacted during the previous data release:
April 21: Kept Key Cash Rate Unchanged at 0.25 pct
March 10: Kept Key Cash Rate Unchanged at 0.25 pct</>
Technical View:
USDCAD:
- The CAD strengthens sharply ahead of BOC’s Cash Rate Decision.
- The pair made intraday high at 1.2116 and low at 1.2077.
- Today a day chart is bearish while H1 chart with triple EMA suggests bullish trend for the time being.
- A sustained close above 1.2121 on H1 chart requires for the upside rally.
- Alternatively, a consistent close below 1.2070 on H1 chart will check key supports too.
| SUPPORTS | RESISTANCES |
| 1.2070 | 1.2121 |
| 1.2038 | 1.2148 |
| 1.2000 | 1.2176 |
| 1.1976 | 1.2222 |
| 1.1952 | 1.2248 |
Take a look and do trade wisely!
Good Luck
