Bank of Canada (BoC) Preview: Dovish Rate-Hike to Fuel USD/CAD Strength

Trading the News: Bank of Canada (BoC) Interest Rate Decision

The Bank of Canada (BoC) meeting may shake up the near-term outlook for USD/CAD as the central bank is expected to increase the benchmark interest rate to 1.75% from 1.50%.

Image of DailyFX economic calendar

A 25bp rate-hike paired with a hawkish policy statement may trigger a bullish reaction in the Canadian dollar as the updates suggest Governor Stephen Poloz Co. will step up the pace to normalize monetary policy, and a material shift in the forward-guidance may curb the recent advance in USD/CAD as market participants prepare for a faster hiking-cycle.

However, a dovish BoC rate-hike may trigger fresh monthly highs in the dollar-loonie exchange rate as it suggests the central bank will carry a wait-and-see approach into 2019, and the Canadian dollar may continue to lose ground against its U.S. counterpart especially as the Federal Reserve warns of above-neutral interest rates. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

Impact that the BoC rate decision has had on USD/CAD during the last meeting

September 2018 Bank of Canada (BoC) Interest

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