The Bank of Canada (BoC) is set to leave rates unchanged in June while comments on the current economic situation, negative rates, and QE are all critical for the loonie, Yohay Elam, an analyst at FXStreet, reports.
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Key quotes
“An ongoing upbeat economic outlook may boost the loonie, while pessimism would send it down.”
“The most likely scenario is that a mention of setting negative rates is omitted. Macklem does not face the press at this juncture, so it would be easier to avoid the topic altogether. However, if sub-zero rates make their way into the official release, the loonie could tumble.”
“If Macklem remains open to more bond-buying, it would be positive for the Canadian dollar. While money printing is seen as a devaluation, it could support government relief and stimulus, boosting the economy. If he hints at a significant and imminent boost to such schemes, that could already tip the balance against the loonie.”
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