The Bank of Canada Rate Statement and Overnight Rate will be announced this morning at 10 am New York time. In January, they did raise the interest rates due to a better-than-expected consumer spending, expanding job market and stronger business investments. However, the last couple of months have revealed a "not so bright" picture. Jobs have been lost and GDP numbers have decreased. With the numbers coming in lower than anticipated, analysts predict that the Bank of Canada will not increase the interest rates today. How will this affect the USDCAD?
Currently, the USDCAD higher timeframes show that the market is overbought on both the daily and weekly timeframes. Additionally, the weekly is at a point that could act as resistance.
Additionally, going down further in time, the 240-minute chart is showing that price has overhead resistance at 1.2980 and the 60-minute chart has overhead resistance at 1.2960.
If these two areas hold price back prior to the Bank of Canada Rate Announcement, then there is a potential for the market to go down. But why would the market go down if the Bank of Canada doesn't raise interest rates? It may depend on the actual rate statement and not whether they raise the rates.
Investors are looking to see how the Bank of Canada members react to the recent reports, which were less than expected. Will they provide clues as to whether they are going to raise interest rates later in the year? And, if so, how many times will they anticipate raising them? Are the recent dismal reports in line with what they had anticipated earlier?
Additionally, several economists have stated that an increase in interest rates would not necessarily harm consumers. The majority of debt in Canada is in the form of mortgages versus consumer credit. Additionally, even if they opt to raise the interest rates, these rate increases will likely not affect the mortgages because, for many fixed-rate mortgages, the rate is about the same as it was five years ago.