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Should We Keep an Eye on the Canadian Dollar’s Movements in Case the Policy Rate Is Cut by 0.25%?

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Should We Keep an Eye on the Canadian Dollar’s Movements to See If the Policy Rate Will Be Cut by 0.25%?

29.01.2025

Today's Highlights
  1. U.S. FOMC Policy Rate and Statement Announcement
  2. Canada: BOC Policy Rate and Statement Release

In yesterday’s U.S. trading session, the Canadian dollar rose against the yen ahead of today’s Bank of Canada (BOC) policy rate announcement. The CAD/JPY pair traded between 107.396 and 108.269. It retreated from the -3σ level of the hourly Bollinger Bands back to the centerline.On the other hand, on the 4-hour chart, the 20-period moving average is capping the upside, and on the daily chart, the RSI is trending downward from around 60. We will need to monitor price action during U.S. trading hours to see if the Canadian dollar continues to weaken.

Among European currencies, the pound fell against the U.S. dollar. The GBP/USD pair dropped from 1.2495 to 1.2415. On the hourly chart, the price has moved from above the 20-period moving average (MA) to below it.On the 4-hour chart, the pair is currently retesting the resistance zone formed by the 200-period simple moving average (SMA), which it had briefly broken above, and the pound is trending higher again during today’s Asian trading session. We will monitor the situation to determine whether the pound can maintain its upward momentum.

Today’s economic indicators include the Australian Consumer Price Index at 9:30, the Japanese Consumer Sentiment Index at 14:00, the Swedish central bank’s policy rate and statement at 16:00, the Eurozone money supply at 18:00, the U.S. MBA Mortgage Applications Index and Mexican employment statistics at 21:00,at 22:30, U.S. Wholesale Inventories; at 23:15, remarks by Bank of England Governor Bailey; at 23:45, the Bank of Canada’s policy rate decision and statement; at 24:30, a press conference by Bank of Canada Governor McClean; U.S. weekly crude oil inventories;at 28:00, the U.S. FOMC policy rate and statement, and at 28:30, remarks by U.S. Federal Reserve Chair Powell. We will be watching the Canadian dollar’s movements following these releases to see if the policy rate is cut by 0.25%, as expected by the market.

桜井 慶介

Author: Keisuke Sakurai

He has over 10 years of experience in FX trading. In the financial sector, he has been involved in investment management with a particular focus on foreign exchange markets and has experience as an asset management advisor. Drawing on his extensive experience, he specializes in technical and fundamental analysis.

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With tomorrow’s U.S. FOMC meeting approaching, will the U.S. dollar continue to weaken? Caution is advised.

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