BoC Preview: What to expect of USD/CAD

By FXStreet The Bank of Canada will hold its monetary policy meeting later today. The consensus amongst market participants expects the central bank to leave its monetary stance unchanged today, with the benchmark rate at 0.50% since the 25bp cut in July 2015.

Analysts remain pretty divided regarding the potential grade of response from the BoC to eventual moves from the Federal Reserve, although “Philip Marey, Rabobanks’s Fed Watcher, expects two rate hikes from the Fed this year with the first in June and the second in December but despite this there is no reason to expect the BoC to follow and if anything, the Canadian central bank lively retains a slight easing bias albeit one we don’t expect it to act upon”.

Regarding USD/CAD, crude oil dynamics remain the almost exclusive driver for the pair, with the divergence in monetary policy between the Federal Reserve and the Bank of Canada taking the passenger’s seat for the time being. In the meantime, spot continues to extend its bounce off multi-month lows in the mid-1.2400s seen in early May and currently attempting to consolidate the upside in the area below the critical 1.3200 mark. The initial up barrier aligns around April’s high at 1.3219 …read more

Source:: FX Street