Forex News

Bank Of Canada Hike Rate by 75 BPS

Bank Of Canada Hike Rate by 75 BPS

The Bank of Canada interest rate decision meeting will be held on Wednesday, October 26th. BOC Governor Macklem will follow with a press conference beginning at 11:00 ET.

BOC hiked rates by 75bps at their last meeting in September. This was the fifth consecutive rate hike and it brought rates to 3.25%, the highest since 2008. In addition, the BOC said that, given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further. The Central Bank also said it will continue with its quantitative tightening program.

The August headline CPI dropped from 7.6% to 7%! However, the September reading only dropped to 6.9%, slightly higher than expectations. The YoY core rate only fell from 6.1% in July to 6.0% in September as well. Although the headline print may have dropped 0.7% YoY in two months, the core rate has only dropped 0.1% YoY. BOC Governor Macklem spoke between the inflation readings and noted that further interest rate increases are warranted to tame inflation.

USD/CAD is coiling inside a symmetrical as it waits for the outcome of the BOC meeting. If the pair breaks out to the topside, the first resistance is the highs from October 21st at 1.3854. Above there, USD/CAD can move to the October 13th highs at 1.3855 and then 1.4008, which is the high from May 2020. However, if the pair breaks to the downside, first support is at the 38.2% Fibonacci retracement level from the lows of September 13th to the highs of October 13th at 1.3586. Below there, support is at the October 4th lows of 1.3503, then the 50% retracement from the above mentioned timeframe near 1.3466.