Decreasing the purchasing program
By: Ahura Chalki
Market analyst – IFC Markets
Later today, BoC will have an interest rate decision and announcement of monetary policy meeting. Market and analyst expectations are that the central bank keeps rates unchanged at 0.25% but announces more tapering of its purchase program. It will be a third central bank, after RBA minutes and PBoC meetings earlier this week. Tomorrow also we are waiting for the ECB meeting.
Analysts at Wells Fargo: “We believe the BoC will announce the further tapering of its Canadian government bond purchases at its April 21 meeting, reducing its purchases to at least C$3 billion per week, from the current pace of at least C$4 billion per week. While we do not expect any changes to policy rates, we do feel the BoC will look to lift interest rates in the second half of 2022.” (Bloomberg)
Also, good recovery in other economies will help the market demand of WTI, one of the main drivers of the Canadian economy. BoC board members must consider it. Like other significant banks, it expects that BoC also starts to ease its dovish policy and lower purchasing as the recovery path is getting more transparent.
At the same time, we will have the CPI data, which is expected to increase by higher Oil and petrol prices.
Today’s BoC decision is expected to put the CAD under pressure, while WTI is also trading under its pivot point. Fundamental data and news, supposed to confirms the newly created uptrend in USDCAD daily chart. Technically 1.2600 seems like an essential and key level. Crossing above this level means above main MA lines, where RSI will be above 60 marks and price above OBV trend line. 1.2660 is the first resistance above the key level of 1.2600, and after that, the second and third resistance levels will be at 1.2715 and 1.2800.
On the other hand, with vital CPI data and holding positions from BoC with no surprise and changes, CAD must be get supported. In this case, breaching under pivot point of 1.2570 will open the doors for lower levels at 1.2516, 1.24225, and then 1.2370 as S1, 2, 3.
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