BoC kept overnight rate unchanged at “effective lower bound” of 0.25% as widely expected. Bank rate and deposit rate are held at 0.20% and 0.25% respectively. BoC also maintained its “extraordinary forward guidance” of keep rates at current level until inflation objective is achieved Also, the quantitative easing program will continue at current pace of at least CAD 4B per week.
BoC noted globally, recent news of vaccines is “providing reassurance that the pandemic will end and more normal activities will resume”. However, “pace and breadth of the global rollout of vaccinations remain uncertain”. In the near term “new waves of infections are expected to set back recoveries in many parts of the world”.
Q3 Canadian data were consistent with expectations of a “sharp economic rebound”. However, “activity remains highly uneven across different sectors and groups of workers”. Record high cases in coronavirus in Canada are also “forcing reimposition of restrictions. That would “weigh on ” Q1 growth and ” contribute to a choppy trajectory until a vaccine is widely available”.
CAD/JPY resumes rally after BoC
CAD/JPY edges higher after BoC rate decision, which carries no surprise.. For now, there is no clear follow through buying yet. But we’ll tentatively treat the development as rally resumption. Focus is on 81.91 resistance. Firm break there will resume whole rise from 81.91 to 61.8% projection of 73.80 to 81.91 from 77.91 at 82.92. However, break of 81.16 minor support will delay the bullish case and bring more consolidations first.