Bank of Canada (BoC) today afternoon will summarize its May meeting on monetary policy. The agenda has no space for a press conference, and most economists surveyed by popular media agencies do not expect any major PolMon changes and rate movements.
Again a non-event? Thursday’s OPEC meeting is much more important for CAD
Institutional analysts agree on one – Wednesday’s summary of the Bank of Canada meeting and publication of statement on monetary policy will not bring any surprises and shouldn’t trigger any stronger moves on Canadian dollar.
Bank officials will pay close attention to the rising risk of household and building debt growth, or unsatisfactory inflation levels and poor earnings growth, but this should be more in tune with the neutral rhetoric. In the light of lack of forecasts of major changes in content of the statement and the press conference, today’s summary should be non-event .
However, Barclays analyst team believes that another session (Thursday, May 25) may be far more interesting for investors on Canadian dollar (CAD). Tomorrow we will see results of OPEC meeting, during which will be held debate on the extension of the production cut:
“The price of oil can gain due to information of finalization of the agreement, but growth should be limited. More aggressive cut of short-term mining has potential to trigger black gold market bearish movements – due to risk of increased supply among non-OPEC countries. CAD will reflect oil price movement “
CAD too expensive even up to 5%?
The Bank of America Merrill Lynch (BofA ML) analysts are of similar opinion about the lack of influence of today’s CAD session. What more, they argue that the rate of the Canadian dollar in fundamental terms should move at levels lower by 3-5%. Recent bank forecasts suggest that at the end of the year USD/CAD may touch 1.3900 levels.
Its own commentary has also been presented by CIBC Business Team. At 16:00 (after publication of the decision on BoC interest rates) they expect only a slight appreciation of Canadian dollar and a re-test of 1.3400 in coming sessions. However, this scenario could be disturbed by OPEC meeting with the risk of CAD depreciation.
The possible appreciation of CAD after meeting the results of BoC meeting could bring price to yesterday’s 1.3450 minimum.
