CAD regains some ground ahead of BoC policy decision – Scotiabank

The Canadian Dollar (CAD) lost ground yesterday after weaker than expected CPI data lifted market speculation that the BoC could cut interest rates at today’s policy decision (13:45 GMT), Scotiabank's Chief FX Strategist Shaun Osborne notes.

Broader trends remain bearish

"The CAD is regaining much of the ground lost on the data yesterday, however, and should be able to improve a little more if the Bank matches the street consensus for a hold decision. Swaps are pricing in a little more risk of a cut but pricing remains equivocal at best."

"Policymakers may want more clarity on the fluid tariff situation before deciding to ease policy again. The Bank releases its updated MPR this morning at 10ET and Governor Macklem and Senior DG Rogers will speak at 10.30ET."

"Solid gains in the USD yesterday following the stalling in the USD decline in the low 1.38 area may signal a short-term low for USD/CAD at least. Broader trends remain bearish, however, which suggests limited scope for the USD to extend gains. Resistance is 1.4000 /25. Support is 1.3825/45."