BANK OF CANADA RATE DECISION & CAD PRICE OUTLOOK:
- The Bank of Canada (BOC) has finally capitulated to dovish market expectations and cut its policy interest rate target by 50-bps to 1.25%
- USD/CAD price action ripped higher while spot CAD/JPY took a plunge in response to the latest BOC monetary policy update
- The Bank of Canada has not cut its benchmark interest rate since July 2015
The Canadian Dollar is cratering after the latest BOC decision. The Bank of Canada, championed by Governor Poloz, announced that the central bank just cut its benchmark interest rate by 0.5% from the previous 1.75% level.
The move comes as little surprise to traders, however, considering that overnight swaps were pricing in 43-bps of easing headed into the BOC interest rate decision.
CANADIAN DOLLAR INDEX PRICE CHART: 5-MINUTE TIME FRAME (MARCH 04, 2020 INTRADAY)
The Canadian Dollar Currency Index (CXY) took a sharp drop immediately after the Bank of Canada announced that it cut rates by 50-bps, which completely erased gains from earlier in today’s trading session.
CAD price action has potential to keep coming under pressure now that the BOC Governing Council has capitulated to join other dovish central banks providing monetary stimulus.
USD/CAD PRICE CHART: 1-MINUTE TIME FRAME (MARCH 04, 2020 INTRADAY)
CAD/JPY PRICE CHART: 1-MINUTE TIME FRAME (MARCH 04, 2020 INTRADAY)
At the same time, spot CAD/JPY took a 40-pip spill down to the 80.000 level immediately after the BOC interest rate decision as the Canadian Dollar comes under pressure against most major currency pairs.
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