CA BOC Interest Rate today is widely expected to be a hike. With BOC Governor Poloz almost confirming a rate hike during recent press appearance, market is likely to BUY ahead of the release and potentially SELL on release time. Although the key factor would be the actual statement and the Press Conference at 11:15am, I would still recommend to buy ahead of the release (SELL USD/CAD) since everyone else is going to do so…
Another positive reason to be buying CAD is the recent Employment Change, which definitely supported the notion that economy is improving in Canada and the recent depreciation provided ample room for CAD to go…
Here’s what analysts expect:
10:00am (NY Time) CA BOC Interest Rates Decision Forecast 0.75% Previous 0.50%
DEVIATION: 0.25% ( SELL CAD 0.50% | BUY CAD 1.00%)
The Trade Plan
Most analyst agree that the BOC will hike rates to 0.75%. I´ll be trading this release with a 0.25% deviation using Spike Trading method. In the event of a surprise hike it´s almost guaranteed that we´ll see strong market movement immediately after the release… However, in all reality, BOC is unlikely to surprise the market today, especially considering recent economic data.
We’ll plan our spike trading only if we get a 1.00% release (SELL USD/CAD), or an unchanged release at 0.50% (BUY USD/CAD). Aside from spike trading, I’d just sit on the sidelines and wait for the Press Conference while going over the BOC Statement…
I’d recommend to use the Recommended Pairs from above as they are based on my CSM, which should provide the best combination of currency pairs to trade based on better/worse news… of course, you can also trade the default pair: USD/CAD.
Outlook Score
Outlook score is derived from market sentiment, focus, and economic indicators for the currency. It represents the long-term trend of the currency and its market perception. In short, a strong Outlook Score means more long-term demand for the currency, and a weak Outlook Score is the opposite.
Definition
BOC Interest Rate Decision is set in a target bandwidth for the overnight rate each month of +/- 0.25% around its target overnight rate. The Bank of Canada does not interfere in the overnight market so long as the overnight rate stays within its target band, but the Bank will use its reserves to lend or borrow in the overnight market to ensure that the overnight rate stays within its announced bandwidth.