USD/CAD is hanging by a thread
USD/CAD has consolidated for the past five days after breaking down last week. Now the pair looks like it’s ready for another foray to the downside.
But the market will be reluctant to break down with the Bank of Canada decision coming on Wednesday. The consensus is for no change from 1.25% but the BOC has burned many traders in the past year and the OIS market implies about a 19% chance of a hike. That rises to 46% in May so signals will be critical.
If there is a strong signal about higher rates, expect a quick move down to 1.2450, which was the mid-February low. If it’s a surprise hike, expect 1.2300.