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​Market Analysis: All Eyes on the BOC Rate Decision – USD/CAD Bulls with the Advantage on Their Side

October 24, 2018 10:17


Source: Economic Events 24 October 2018 - Admiral Markets' Forex Calendar

The fundamental main event of today is clearly the rate decision of the BoC (Bank Of Canada) at 3pm BST. As we have already pointed out in Admiral Markets' weekly outlook this past Monday, the BoC rate decision is, after the ECB rate decision tomorrow, potentially the second most interesting news event of the week. At first glance, with markets expecting the BoC to hike the rate by 25 basis points, one might come to the conclusion that the Loonie has at least some bullish hours ahead of it. In fact, this seems far from the truth. After consumer prices came in below expectation last Friday for September YoY at only 2.2% (instead of 2.7%), the USDCAD currency pair stabilized around its pre-weekly highs around 1.3130. When taking a small step back, we can clearly identify a sequence of higher highs and lows on an 4-hour chart, since the beginning of October and the consolidation around 1.3100 can clearly be considered bullish.

That being said, and if we get a push above the pre-weekly highs of around 1.3130 (probably initiated by a "dovish hike" from the BoC), a first target can be found around 1.3180/3200, the region around the weekly pivot point R1, falling together with the region around the September highs. If the bulls take on enough momentum and re-conquer the 1.3200 mark, a move up to the July highs and the weekly pivot point R2 around 1.3270 seems possible. This is only the case if the USD/CAD currency pair drops back below 1.3000/3030 and the weekly PP, the bulls would then lose their current positive outlook:

USDCAD 4 Hour

Source: USDCAD 4 Hour Chart - Admiral Markets MT5 with MT5SE Add-on - Accessed: 23 October 2018, 11:00 PM CEST

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