BOC Hikes And Signals More To ComeThe Canadian Dollar has seen fresh demand today following yesterday’s April BOC meeting. BOC governor Tiff Macklem announced a .5% hike, as expected, marking the bank’s largest rate hike in 20 years. While the move was well-anticipated by markets, CAD seems to have avoided the fate of NZD following a similar hike just a day before. Much of the bullish reaction in CAD is linked to the guidance and outlook issues alongside the rates decision.Looking ahead, the BOC outlined clear concern over the path of inflation citing the need for further rate hikes. However, the bank pointed that it has no pre-determined course for hikes and will instead react to data and developments as they come. What the BOC didn’t do, however, was state that this hike would pave the way for smaller hikes going forward. With this in mind, the market judges that further .5% hikes will likely be used in the remainder of the year, keeping CAD supported. The BOC also noted that it will begin winding down other easing measures (QE) from end of April, increasing the level of tightening withinTechnical ViewsUSDCADThe recovery off 1.2469 was firmly rejected at the 1.2648 level with a large bearish engulfing candle forming yesterday. With this in mind, focus is now on a further test of the 1.2468 level. Both MACD and RSI are turning lower and the retail market is holding a roughly 70% long position, suggesting plenty of room for further downside near term.
Source: Tickmill
