BOC interest rate decision
The Bank of Canada (BOC) interest rate decision will take place this afternoon. Rates are currently set at 1.75% after a rate hike in October 2018.
It is expected that rates will be kept on hold and will continue to be for the foreseeable future. The speech by BOC Governor, Stephen Poloz following the decision does have the influence to move the market.
If Poloz makes a hint towards a potential rate hike before the end of 2019 we could see Canadian dollar strength. It is plausible as Canada attempts to keep up with US monetary policy.
If Poloz’s tone remains dovish expect little movement on the market.
Oil price to influence CAD
Oil prices have recently risen due to the US imposing sanctions on Iran surrounding oil. Canada’s primary export is oil and due to this any fluctuations in oil price can impact the value of the Canadian dollar.
Many economists believe this could be short lived however. During Q4 of last year oil prices fell by as much as 16% which meant commodity based investors took a substantial hit.
If you have a trade involving the Canadian dollar it could prove wise to keep an eye on oil prices as this could have a significant bearing on your trade.
Brexit limbo
Brexit again will come back to the forefront as the main influencer on GBP/CAD. MPs have now returned to parliament to discuss how to proceed. May is currently trying to come up with a mutually accepted deal between the Tories and Labour in order to push a deal through. I do not like their chances, there is no accepted consensus within each party let alone getting a deal that the majority of MPs is happy with.
Meena Andreeva, Deputy chief spokeswoman for the European Commission stated, “it is excluded that we renegotiate or reopen the withdrawal agreement because this is the best solution possible.”
It seems Brussels tend to stone wall any changes to the current deal which means Mays’s attempts at gaining concessions could be doomed to fail.
With Brexit currently in Limbo I would expect the pound to remain fragile.
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