BOC In Focus
Today’s BOC meeting is drawing plenty of attention with traders looking to see whether the BOC will continue its tightening path and announce further tapering, or put its operation on hold for now in response to rising COVID rates and political uncertainty ahead of the September 20th elections. With CAD under heavy selling pressure this week it seems the market is broadly expecting the BOC to pause tapering for now. With this in mind the focus will likely be on forward guidance. If the bank strikes a more cautious tone, highlighting increased downside risks, CAD is likely to come under greater selling pressure allowing for plenty of XXX/CAD upside and CAD/XXX downside.
Where to Trade the BOC Meeting?
EURCAD has been showing heavy basing signs over recent months. Price has carved out a strong bottom and has broken above two key trend lines from highs. The key level now is the 1.5051 region. A daily close above there opens the wave for a run up to the .5207 next. With indicators turned bullish and the retail community holding a more than 60% short (plenty of room to build), there is ample scope for a breakout if CAD sell off today.