All eyes are on the Bank of Canada (BoC) interest rate decision today at 14.00 GMT. After considerable economic growth in the area of 3% in 2017, the economic growth in 2018 showed a slight slowdown but is still expected to grow by more than 2%. Businesses tend to be more cautious when investing in the economy, both hiring and capital investments have decelerated. Additionally, inflation has been on Canada’s target level of 2% showing that the economy is approxing full capacity and wages on average are increasing.
The committee when announcing the outcome, may also refer to the tensioned trading relationships with the US and Trump’s announcements to additional tariffs on Canadian imports including aluminum, lumber and vehicles. Considering all the above and the fact that the last rate increase was six months ago, the bank is expected to hike rates by 25 base points, reaching 1.50%.
Should the committee decide to raise the rates, we may expect the demand of the CAD to increase, raising its value against other major currencies. On the other hand, because of the latest tensions with the US there is still a possibility that investors have been expecting this outcome of the committee and we may see the opposite effects on the CAD.
To sum up, the Loonie has reached 1.3145. If the bearish dominate we could see the Loonie finding support at 1.3100 and take over the 1.3160 resistance level and aim for next resistance level at 1.3175. On the other hand, if the bullish dominate we could see a break at 1.3100 support level take over 1.309 and aim for the next support level at 1.3065.