It is expected that market volatility will increase today from 14:30 to 20:00 (GMT+2). At 14:30 important US inflation indicators for March will become known including producer price index and retail sale volume. According to the forecast the indices will rise against the previous month and in this case the USD will grow.
Later, at 16:00 interest rate decision by the Bank of Canada will become known and accompanying statement by the bank. At 17:15 a press-conference will begin and the head of the Canadian Central bank will Stephen Poloz will answer questions and shed light on future monetary policy. It is expected that interest rate will be left at the previous level of 0.5%. As stated earlier, the Bank of Canada plans to continue soft monetary policy in order to support economy. The Bank admits that the interest rate can be reduced to a negative level of -0.5% with the aim of reaching target inflation level.
Rapid rise in the pair USD/CAD since last July from the level of 1.0650 up to 1.4680 has been neutralized by sharp decline in the pair since the beginning of this year. The decline in the pair was caused by the rise in oil prices. The lows of the price were at the level of 27.00 USD per a barrel of crude oil Brent. The Canadian economy is focused on exports, the most part of which is energy resources. Therefore, low rate of the national currency is preferable for Canada, as it brings revenue to the country’s budget and supports Canadian exporters. Current rise in the CAD is a negative factor according to the bank. It is likely that Mr. Poloz will mention about it in his speech. A speech by Mr. Poloz and the following comments will have only short-term impact on the future movement in the CAD.
At the same time oil prices will have a greater influence of the price of the CAD. The second factor affecting the price of the pair USD/CAD is the US Fed monetary policy. Yesterday, San Francisco Fed president John Williams said that the interest rates in the USA might be raised twice or three times in 2016. This is a positive fact for the USD in the currency market.