US stocks and oil slipped as Donald Trump threatened not to sign a long-awaited stimulus bill into law. The market sentiment had been already fragile, and Trump’s comments worsened it even more.
Will the BOC add strength to the Canadian dollar?
The Bank of Canada will publish a rate statement and an update on the interest rate on September 9, at 17:00 MT time.
Instruments to trade: USD/CAD, CAD/JPY, EUR/CAD
After the rate cut to 0.25% in March, we don't expect any changes this time. Besides that, there are several reasons for following the upcoming meeting of the Bank of Canada. Firstly, we need to see if the BOC representatives find the current Covid-19 response (asset purchases) sufficient in current economic conditions. Secondly, it is interesting to hear any hints on possible changes in the monetary policy framework, which is set to be renewed with the federal government next year. For now, policymakers agree that the 2% inflation target is an appropriate one. And, the last but not least, we will be excited about the comments on the current performance of the Canadian dollar, which is trading at the levels of the beginning of 2020.
- If the BOC highlights positive developments in the Canadian economy, the CAD will strengthen;
- If the BOC comments about the weak economy and remaining risks, the CAD will weaken.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.
The US dollar’s weakness offered a boost to emerging-market currencies and oil.