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#1 19-01-2021 16:58:50

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 3069
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CAD: today's a big day for the Canadian dollar

CAD: today's a big day for the Canadian dollar


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Today's Bank of Canada (BOC) monetary policy meeting is the first of the new year, and Canadian Dollar (CAD) traders are ready for some wild market moves. Also known as the "loonie dollar," the CAD is one of the currencies that has advanced the most against the U.S. dollar in the past 12 months.

Since the price of oil recovered from negative territory, the CAD has gained significantly. It has risen not only against the U.S. dollar but also against the euro - another currency that has strengthened for most of last year.

Let's look at a few key CAD pairs and what today's BOC decision might bring.

The Bank of Canada should keep its monetary policy unchanged

The BOC is expected to keep the overnight rate unchanged at 0.25%. Traders will therefore focus on the BOC press conference that will follow an hour after the release of the monetary policy report and rate statement.

The press conference is the event where traders will be looking for clues about the bank's plans. This is called the BOC's "forward guidance". However, today, traders may have an eye on other events that could move Canadian pairs. One of them is Biden's inauguration in Washington D.C. - more important for the USD/CAD pair on a day when the Bank of Canada is expected to hold its policy in abeyance.

USD/CAD

For USD/CAD, after the oil price recovered from its negative levels, there was little or no rebound. It dropped from 1.46 to 1.26, a huge two thousand pips on the back of a weak dollar and a very strong CAD.

The 1.30 level acted as a pivot for the pair for a long period of time. If the BOC sounds dovish during the press conference, the USD/CAD's rebound could reach 1.30. The USD/CAD's rebound could be as high as 1.30.

EUR/CAD

This is the week of the ECB - European Central Bank - meeting and the EUR/CAD pair finished the previous week on its knees. The pair nearly reached 1.60 in July, formed a double peak, and has dropped over 599 pips since then. The CAD's rise against the EUR, one of the strongest currencies on the forex dashboard, was one of the surprises in the second half of last year and the beginning of the news.

GBP/CAD

It is one of the most volatile cross pairs on the forex dashboard. In addition to higher volatility, it also has a larger spread with respect to other crosses. Today's BOC decision and press conference will be followed by a speech by Mr. Bailey of the Bank of England at the Bank of England's Citizen's Panel Virtual Open Forum. As questions from the public are expected, the crossover pair may ignore the BOC's message and focus on the Bank of England's direction.

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