Today started with the consumer inflation report CPI (consumer price index) from Australia, which was expected to show a small cool-off to 1.6% in Q3, from 1.8% in Q2, but remained unchanged at 1.8%. Later on, we have the Bank of Canada meeting, which is expected to produce a 0.75% rate hike, which would take interest rates to 4.00%. Although, what’s more important is the statement and the press conference which will follow, which would set the path for the CAD in the following weeks.

USD/CAD H4 Chart – Stalling at 1.35 Support

The 200 SMA is providing support at well

Right now USD/CAD is trading at the 200 SMA (purple) on the H4 chart, after retreating lower this week. That moving average stands at around 1.35, which held as support during the retreat earlier this month. Now, odds are 50/50 for wither side, if the BOC hints at slowing down or pausing rate hikes, then it’s likely that this pair bounces form here, if they stay the course of the last several meetings, then we should see a bearish breakout.

Goldman Sachs discusses CAD outlook around tomorrow’s BoC policy decision.

• “This week’s Bank of Canada meeting is a close call, with consensus split on whether they will take another step down in the hiking pace after more mixed activity news and a slightly softer Business Outlook Survey, but still-firm inflation,” GS notes.
• “This could have important implications for CAD; the market is laser-focused on whether central banks will “pivot” or at least “fall off the pace” of the Fed. So far this year, the Canadian Dollar has been a clear outperformer due to the BoC’s aggressive actions and the loonie’s tight links with the USD. However, as recent AUD depreciation demonstrates, if the BoC gives the impression that it is starting to take a more balanced approach, then CAD would probably see some of that outperformance fade,” GS adds.

USD/CAD Live Chart