BOC On Watch

Ahead of tomorrow’s BOC meeting, the Loonie is sitting on support at the 1.2469 level, still within the recent bearish channel which has framed the decline this year. The downtrend in USDCAD is now well developed and has most some momentum over recent months. However, with fresh USD weakness underway there are downside risks for the pair, particularly into the BOC meeting this week.

Hawkish Expectations

The market is broadly expecting that the bank will announce tapering of its asset purchase program from 4 billion CAD to 3 billion CAD on a weekly basis. In line with the bank’s assessment that the economy is continuing to recover at firm pace, and encouraged by the pace of vaccinations, the upside risks are visible here. If the bank cuts its easing program as expected and revises higher its growth and inflation forecasts, this is likely to see CAD gaining and the Dollar putting the 1.2368 and 1.2243 levels into view as downside targets for bears.

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