How will the BoC rate decision impact markets today? We look into the Forex Market Outlook ahead BoC rate decision together with market analysts from OctaFX.
6 September, OctaFX – The economic calendar is in full swing on Wednesday, as a deluge of market-moving events are scheduled. None are bigger than the Bank of Canada (BOC) interest rate decision, which is due at 14:00 GMT.
Forex Market Outlook ahead BoC rate decision
The BOC is expected to keep interest rates on hold at 0.75%, but not everyone is banking on a status quo decision. In fact, many analysts believe the central bank will raise rates on Wednesday after Canada emerged as the G7’s fastest-growing economy in the first half of 2017.
It’s only a matter of time before the BOC hikes rates again. If policymakers don’t pull the trigger on Wednesday, they will likely do so in the next meeting. On the data front, Germany will release its latest factory orders report at 06:00 GMT. German factory orders are projected to rise 5.8% annually in July, following a 5.1% increase the previous month.
The North American session features several prominent data releases on Wednesday. The US Commerce Department will report on Washington’s July trade balance. The nation’s deficit is expected to widen to $44.6 billion from $43.6 billion the month before.
North of the border, the Canadian government will also report on trade at 12:30 GMT. Canada’s deficit is expected to narrow to $3.3 billion in July from $3.6 billion the month before. IHS Markit and the Institute for Supply Management will release their own versions of US services PMI on Wednesday. The Markit release is expected to show little deviation in August when compared with the previous month.
Earlier in the day, the Australian government reported that the economy expanded 0.8% in the second quarter. That was in line with the consensus view and nearly triple the previous quarter’s disappointing 0.3% gain.
USDCAD trading ahead of BoC rate decision
The loonie was little changed on the eve of the BOC rate decision. Technical indicators are obsolete ahead of the monetary policy announcement. A move to raise interest rates by the BOC will trigger a large rise in the Canadian dollar, which is already testing multiyear highs against the greenback.
How is EURUSD trading today?
Like other dollar pairs, the EUR/USD was range bound on Wednesday as investors eyed fresh trading catalysts. The EUR/USD toed the line at 1.1910 through the early morning hours. Immediate resistance is located at 1.1960. A breach of this level could send prices back toward the psychological 1.2000 region.
6 September AUDUSD technical analysis
The Australian dollar held within a narrow range following the GDP report. The AUD/USD exchange rate drifted 0.1% lower to 0.7986. The pair is testing the psychological 0.8000 level, which continues to separate the buyers and sellers. The AUD/USD must first clear the 0.8000 and 0.8026 handles before it can mount a re-test of the year-to-date high of 0.8065. On the opposite side of the ledger, immediate support is located at 0.7920, followed by 0.7880.
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