BoC Preview: A Christmas present for the loonie

The Bank of Canada (BoC) is set to leave interest rates unchanged and is more likely than not to project optimism in the last decision of the year, triggering another drop in USD/CAD, FXStreet’s Analyst Yohay Elam reports.

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Key quotes

“Economists broadly expect the Ottawa-based institution to leave its interest rate unchanged at the December 9 meeting, yet the statement may move markets. [...] All in all, there are good reasons for the BoC to convey an upbeat message about the economy moving forward rather than focusing on the negatives in the present.”

“If Macklem indeed opts for a glass-half-full, the Canadian dollar may drop and USD/CAD could extend its decline from the highs. The currency pair's moves have US dollar declines across the board. Conversely, a more cautious approach could trigger a short-squeeze in Dollar/CAD, allowing for an upside correction before another probable move lower.”