USDCAD: Rousing the risks around the BoC rate decision – TDS

By FXStreet FXStreet (Delhi) – Research Team at TDS, suggest that all eyes will be on the Bank of Canada meeting which is expected to leave the overnight rate unchanged at 0.50%.

Key Quotes

“The accompanying Monetary Policy Report (MPR) should contain downward revisions to Q4-2015 and 2016 growth due to dimmer international prospects. We think it remains premature for the Bank to sound optimistic despite Q3 GDP tracking nearly a full percentage point above their estimate in the July MPR (which is at 1.5%) especially as US growth has decelerated (the Atlanta Fed is tracking 0.9% q/q ann. for Q3).”

“Overall, we think the communique and MPR will lean towards the cautious side but the risk is that the Governor sounds a touch more upbeat at the press conference so a dip into the 1.28/1.29 region should be bought (we see key support at 1.2830 and 1.2900). We see key resistance at 1.3070/80.”

“We believe that downside in USDCAD is limited as it is essential to the economy’s rebalancing act and material CAD strength may see the BoC intensify its rhetoric that a weak currency is a key shock absorber.”

“And, with signs of slippage in US growth—especially in sectors that matter for the Canadian …read more

Source:: FX Street