Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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USDCAD Seeks Breakout Ahead of BoC Decision on Interest Rate

USDCAD trades at 1.1312 and is looking for buyers as it pauses ahead of the Bank of Canada interest rate decision tomorrow.usdcad chart

USDCAD-Daily Chart

Markets are expecting a whopping 0.75% rate hike from the BoC and the actual size of the hike, or comments from policymakers, will either put a lid on USD gains or see it breakout.

Tomorrow’s number will determine if the US dollar can get above 1.32 or start a pullback towards the 1.30 level.

The greenback got a boost from today’s ISM Non-Manufacturing PMI figures, which showed a reading of 56.9. That was higher than the 55.1 expected and keeps the economy in expansion mode.

The Bank of Canada is widely expected to announce a fifth interest rate hike this year as it tries to tackle sky-high inflation. In July, the bank surprised markets by raising the rate by a full percentage point, bringing it to 2.5 percent. A move to 3.25% would be a huge jump from 0.25%, which is the level Canadian rates started the year at.

Analysts say there is a possibility of another percentage point move, or 0.50%, but the likelihood is 0.75%. Traders should look for opportunities to trade a surprise to the expectations.

The US Federal Reserve is also expected to go for another rate hike of around 0.75%. If Canada goes harder, it will make their bonds more attractive, with both countries sitting at a rate of 2.50%. A 0.75-1% move would give the Canadian dollar some impetus, but a 0.50% move may swing the pendulum back to the US dollar.

This pair can offer some volatility over the rest of the week as there will be trade balance figures released with the rate decision. On Friday, we will get employment for the Canadian economy. The country is expected to add 15,000 jobs while the unemployment rate rises by 0.1% to 5%. This will tie the employment figures to the rate decision much more closely. Traders will look to see if rate hikes are harming the economy, as the BoC would then consider scaling back.

Last Updated: 07/09/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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