BOC Highlights Upside Risks
The Bank of Canada kicked off its tightening cycle as expected yesterday. BOC governor Macklem announced a .25% hike and signalled further hikes to come across the year. The statement issued alongside the rates move noted that “Price increases have become more pervasive, and measures of core inflation have all risen. All told, inflation is now expected to be higher in the near term than projected in January.”
Looking ahead, the “Persistently elevated inflation is increasing the risk that longer-run inflation expectations could drift upwards.” In light of this, the market clearly judges that there are upside risks for CAD over the year given that, in inflation doe continue to run beyond projections, the BOC might need to tighten more aggressively.
In terms of gauging further rate hikes, the statement noted that “The timing and pace of further increases in the policy rate, and the start of QT, will be guided by the Bank’s ongoing assessment of the economy and its commitment to achieving the 2% inflation target.”
Technical Views
EURCAD
The market remains under heavy selling pressure following yesterday’s BOC meeting. Price has now broken below the 1.4029 level and is on course to test the next downside objective at the 1.3876 level. With both MACD and RSI bearish, the focus is on further downside near term while price holds below the 1.4167 level and bear channel top.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.