Forex Signal (Tue May 31 2011, 9:00am NY Time EST) - CAD BOC Interest Rate Decision

Henry Liu

Former FPA Special Consultant
Messages
473
The Bank of Canada (BOC) will announce their rate decision today at 9:00am sharp.

Here’s what analysts expect:

9:00am (NY Time) CA BOC Rate Decision Forecast 1.00% Previous 1.00%
ACTION: USD/CAD BUY 0.75% SELL 1.25%


The Trade Plan
Most analyst agree that the BOC will hold rates at 1.00%. I’ll be trading this release with a 0.25% deviation using Spike Trading method. In the event of a surprise hike it’s almost guaranteed that we’ll see strong market movement immediately after the release.

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

The Market
The Canadian economy increased its GDP on Monday by 3.9% for the first quarter of the year, but the CAD could decline ahead of tomorrow’s BOC interest rate decision as interest rates are expected to remain at the previous rate of 1.00%. BOC isn’t being cautious and hopes a strong economic trend can develop before hiking rates. Governor Mark Carney’s statement could indicate a clue as to when rate hikes could be expected.

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 and Data for CAD BOC Interest Rate Decision



Thanks,



 
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