Canadian Dollar Forecast: Data to Support Upbeat BoC, OPEC Shock is a Risk dailyfx.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from dailyfx.com Daily Mail and Mail on Sunday newspapers.
4/20/2021 11:27:48 AM GMT
Bank of Canada is expected to leave its policy unchanged at 0.25%.
Investors await adjustments to BoC’s asset-buying program.
USD/CAD is likely to react more significantly to a dovish surprise.
The Bank of Canada is widely expected to keep its policy rate unchanged at 0.25% on Wednesday. However, the improving economic outlook and recent remarks from officials suggest that the BoC could become the first major central bank to lay out a roadmap out of the ultra-loose policy.
BoC set to lower QE purchases
The BoC’s Business Outlook Survey for the first quarter showed that the business sentiment continued to improve and the outlook indicator jumped to its highest level since 2018. Many firms reported that the negative impact of the coronavirus crisis on their activity was already behind them.
The US economy continues to recover, as consumer spending showed strong gains in March. The Eurozone continues to grapple with high Covid rates and many parts of Western Europe are under lockdown. In the UK, a successful vacccine rollout has led to further easing in health restrictions.
In the upcoming week, the ECB and Bank of Canada will hold policy meetings. The UK releases key inflation and employment data.
Eurozone CPI posted a gain of 1.3% in March, up from 0.9% a month earlier. Inflation remains below the ECB target of 2% but is gaining strength.
In the UK, March PMIs signaled strong economic growth. Services PMI improved to 56.3, up from 49.5. This was well into expansionary territory, above the 50-level. Construction PMI jumped to 61.7, up from 53.3. This showed the strongest rate of construction output growth since September 2014.
USD/CAD showed little change last week.
There are four Canadian economic releases in the upcoming week, including the Bank of Canada rate decision.
Here is an outlook for the highlights and an updated technical analysis for USD/CAD.
The quarterly BoC Business Outlook Survey indicated that business sentiment continues to improve. Firms reported less uncertainty related to the COVID‑19 pandemic and strengthening demand from weak levels. Still, the recovery remains uneven. Manufacturing Sales took a downturn in February, posting a decline of 1.6%. The ADP Employment report surged, with 634.8 thousand new jobs in March.
In the US, CPI rose in March, but the reaction of the US dollar was muted. Headline CPI climbed from 0.4% to 0.6% and Core CPI improved to 0.3%, up from 0.1%. Retail sales soared in March – headline retail sales came in at 9.8% and the core reading rose 8.4%, well above the forecast.
USD/CAD Forecast April 19-23 – Will Bank of Canada taper QE? forextv.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from forextv.com Daily Mail and Mail on Sunday newspapers.