How positive will the Bank of Canada chairman be this time?
Poloz is usually optimistic until he suddenly cuts rates.
The Bank of Canada has the monthly meeting scheduled for today at 14:00 GMT. They will deliver the interest rate decision first and then the chairman, Mr. Poloz, will hold a conference, as is the ritual with most central banks. The outcome of this meeting is quite important for us because we have a long-term buy forex signal in USD/CAD which we opened at the end of last week. But, what are the forecasts for this meeting? What do the economists say? The majority of them don´t expect a rate cut and the overnight rate is expected to stay at 0.50%. The OIS shows that the odds of a cut are only 6%, seeing as Poloz has been optimistic lately about economic growth in Canada, China and the US.
The liberal victory in the federal elections in Canada on Monday has removed some of the risks as well for the Canadian Dollar, so that´s another reason for the BOC to be optimistic. And the economic indicators, what do they say? The price of oil (WTI) which the CAD is very closely related to failed to stay above $50 per barrel when it broke it last week and is now trading in the mid-40’s. That´s negative for the CAD but positive for our USD/CAD open position. Another positive factor for our signal is the Canadian monthly wholesale sales, which posted a 0.1% decline yesterday against a 0.2% expected increase. So, the negative and the positive factors for our USD/CAD buy forex signal balance each other out. We decided to keep the signal open – at least until right before the release. We might close it manually if the price jumps due to fear before the release. If you decide to keep it open, make sure to lock in some profit or at break-even, since that signal is about 40 pips in profit right now.
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