BOC Up Next
The main event today is of course the June BOC meeting. While expectations are limited given that no change in policy is forecast, the meeting still has the potential to impact markets. Given the tapering announcement made in April and the bringing forward of the first projected rate hike, which the BOC now sees as early as next year, the market will now be looking for the bank to maintain a consistent tone.
If the bank reaffirms its view that the economic recovery is in good health, and signals that further tightening is forthcoming in the near future, this should keep CAD well supported in the near term. On the other hand, if the BOC downplays its optimism and or signals that tapering will be on hold for now (maybe while it assesses the ongoing reopening of the economy or waits for data to strengthen more), this could see recent CAD upside positions unwound.
Where to Trade BOC Rate Decision?
The sell off in USDCAD has seen price breaking below the 1.2243 level and below the ear channel low. For now, the 1.2068 level is holding as support and with MACD having turned bullish and RSI rising, there is room for a correction higher. Should price break below the 1.2068 level, however, the next support level is the 1.1957 level.