Forex Signal (Tue December 7, 2010, 9:00am NY Time EST) - CA BOC Interest Rate

Henry Liu

Former FPA Special Consultant
Bank of Canada (BOC) will once again meet for their Overnight Rate (Interest Rate) and the decision will be announced today at 9:00am sharp. Along with the rate decision, BOC Carney will also announce a Rate Statement to further explain today’s decision. Here’s what analysts are expecting:

9:00am (NY Time) CA BOC Rate Decision Forecast 1.00% Previous 1.00%

The Trade Plan

BOC (Bank of Canada) will be keeping its Overnight Rate unchanged as all 24 analysts agree (a survey by Bloomberg). BOC is likely to still remain optimistically cautious in its tone but the overall market is expecting for a pause.

I'll be trading this release using Spike Trading method as in the event of a surprise hike it is almost guaranteed that we'll see strong market movement immediately after the release.

For more information on my Spike trading method, please read:
Henry's News Trading Method

The Market
BOC Carney is likely to keep rates unchanged as the overnight swap is pricing in about 0% of probability of an interest rate hike during this meeting. As a matter of fact, all 28 analysts agree that chances for rate to remain at the current level 1.00% until 3rd quarter of 2011 is almost at 100%, judging from current market condition.

Fundamentally speaking, BOC is likely to take a cautious approach to this sensitive issue, especially when U.S. is looking to add more stimulus. With CAD gaining strength on the back of higher Crude Oil demand due to drop in inventory, inflation is being offset.

Additional Thoughts
It is extremely likely for BOC to keep rates unchanged. Market may react to the accompanied statement, but I believe this would probably be a no trade.

Pre-News Considerations
No Pre-News trading...

Historical Chart & data for BOC Rate Decision


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