Bank of Canada is set to announce its next monetary policy decision today at 3:00 pm BST. Economists expect BoC to follow in Fed's footsteps and deliver a 75 basis point rate hike. Similar expectations can be derived from pricing of money market instruments with 73 basis points of tightening being priced-in for today's meeting. While BoC is following Fed in its policy moves, there is a significant difference between the two - level of rates. Should expectations be met and BoC delivers 75 basis point rate hike, it would put the main Canadian interest rate at 3.25% - a range that is by some seen as restrictive. This raises questions whether BoC will be willing to continue to hike rates further. Having said that, investors will focus mostly on the statement accompanying today's decision for hints on what's next.
Taking a look at USDCAD chart at D1 interval, we can see that the pair has been trading in an upward channel since Q2 2021 and has recently broken above the 38.2% retracement of the post-pandemic downward move. The next resistance to watch in case the upward move continues can be found in the 1.33 area, where the upper limit of the channel can be found. Note that a zone marked with 50% retracement can be found slightly above and will provide additional resistance. Apart from the BoC decision, the pair may also be volatile during speeches from Fed members today.
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2:00 pm BST - Fed Barkin
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3:00 pm BST - Fed Mester
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5:40 pm BST - Fed Brainard
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7:00 pm BST - Fed Barr
Source: xStation5
