The Canadian dollar is trading sideways on Wednesday. Currently, USD/CAD is trading at 1.3106, up 0.04% on the day. On the release front, the Bank of Canada holds a policy meeting and will set the benchmark interest rate. There are on key events in the United States. On Thursday, the U.S releases durable goods orders and unemployment claims.
All eyes are on the Bank of Canada, which holds its policy meeting later on Wednesday. The BoC has raised rates twice this year, and a third hike would raise rates to 1.75%, which would be the highest level since October 2008. This meeting is the first since Canada signed on to a new trade agreement with Mexico and the United States, which should provide a boost to the economy and calm investor jitters. The Federal Reserve raised rates in September and is expected to do repeat in December, so a BoC rate hike will help keep the Canadian dollar attractive to investors.
The Canadian dollar has sagged in October, declining 1.4% in that time. Investor appetite for the Canadian dollar has dampened, as geopolitical tensions have escalated. These include the U.S-China trade war, the uproar over the killing of a Saudi journalist in Turkey, and concerns over Brexit and the Italian budget. As well, the drop in oil prices has weighed on the Canadian currency. Although the markets are expecting the BoC to raise rates later on Wednesday, a rate hike could give the Canadian dollar some momentum and provide a much-needed boost.
