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The Bank of Canada (BoC) will announce its interest rate decision at 15:00 GMT and a 25bp cut is broadly expected as analysts at Rabobank notes. USD/CAD is currently trading at  1.334.

Key quotes

“We expect the Bank of Canada to cut the policy rate 25bp to 1.50%. This marks a small shift given we have long expected the BoC to begin easing in April 2020.” 

“USD/CAD implied volatility was the lowest of any USD cross-currency year-to-date and over the course of the past 12 months but that recently changed as oil prices slumped on Covid-19 fears and rate expectations began to shift.”

“Indeed, the relationship between USD/CAD and oil has risen significantly of late and weakness in the black stuff helped to push USD/CAD out of its recent range as it broke 1.3330 and tested the 1.34 handle.”

“A close above 1.34 wasn’t followed by a subsequent higher close however and we are now back in the congestion zone of 1.33-1.34