Canada BOC Overnight Rate Decision 10/20/09

9:00am (NY Time) CA BOC Rate Decision   Forecast 0.25%      Previous 0.25%
ACTION:  USD/CAD  Depend on Market Condition

BOC (Bank of Canada) renders its Overnight Rate decisions 8 times a year and today’s meeting will be widely watched by traders and speculators alike. Since interest rate policy serves as a tool to fight inflation and maintain price stability, this news event is probably the most important event from Canada for currency traders.

Although there are no official statements pointing to a surprise cut or hike, as BOC Governor Mark Carney stated in his last rate statement that BOC will maintain rates at low level until the end of first quarter 2010, traders are anxious to see if BOC follows suit after RBA’s surprise rate hike last week.

BOC Governor Carney is facing an interesting dilemma as Canada’s economy has recovered substantially with surprise gains in the housing market and consumer spending, while recent trade balance release showed a decline in Canada’s export competitiveness due to the strength in CAD.  This situation could go out of hand fast as growth in the economy heightens inflationary pressure and push CAD to a new level…   

Therefore, we’ll pay attention to Carney’s statement as there are very little expectation for a rate hike this BOC meeting, but if Carney changes his stand over when BOC will hike rates, we’ll see market react with heavy volatility and possible see USD/CAD approaching the parity level. 

I’ll be trading this report and hopefully I’ll post the video back as soon as I can.

Since this trade will involve interpreting Carney’s statement, I’d only recommend experienced news traders… However, the basic plan is to listen for future rate policy… If Carney still maintains same policy, or no hike until end of Q1 in 2010, then USD/CAD should move up, and we could enter on a BUY; if Carney says we could see a rate hike as soon as the end of 2009 or early 2010, then expect to see strength in the CAD as USD/CAD tumbles down to parity levels.

Related posts:

1. BOC Overnight Rate Decision (Interest Rate Decision) 12/08/09
2. Canada BOC Overnight Rate Decision 09/10/09
3. BOC Interest Rate Decision 07/21/09
4. ECB Minimum Bid Rate Decision (Interest rate decision) 12/03/09
5. Forex News Trading Australia RBA Interest Rate Decision 12/06/10
6. Trade Plan For RBA Interest Rate Decision 09/07/10
7. Forex News Trading UK BOE Interest Rate Decision 04/07/11
8. BOE MPC Official Bank Rate Decision 01/07/10
9. Forex News Trading UK BOE Interest Rate Decision 03/10/11
10. Forex Trade Plan And Video For RBA Cash Rate Decision 08/03/10

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