USD/CAD in Focus as Bank of Canada Announces Rate Decision
Global stocks advance on Tuesday as market mood shifts to positive after Omicron concerns fade. Bitcoin back above $51K.
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Principal Points
- USD/CAD to attract traders’ attention as volatility is expected to arrive
- The Bank of Canada is set to announce its latest rate decision in a press conference
What’s Moving in the Markets?
The USD/CAD pair will be the focus in forex trading today as traders anticipate the latest decision from the Bank of Canada. More precisely, the interest rate decision from Canada’s central bank today will highlight the bank’s stance toward the economy.
Economists speculate that the Bank of Canada will begin raising rates in early 2022. However, central bankers in Canada may think differently. Several factors will need to be weighed today in order to assess the proper interest rate.
First, concerns over the new Omicron Covid-19 strain could impact the bank’s position toward raising rates. On this note, the Bank of Canada may decide to tilt the balance towards better labor-market conditions as opposed to the uncertain economic outlook.
Second, the Canadian economy produced a stellar jobs report last month. In numbers, 154,000 new people found employment in November, compared with 31,000 new jobs in October. Also, the unemployment rate fell from 6.7% to 6% in the past month.
In that context, today’s decision will most likely create high volatility in the Canadian dollar. Presently, the USD/CAD hovers near 1.2651.
What’s the Big Picture for Traders?
In the wider financial markets on Wednesday, traders and investors are feeling optimistic toward the outlook. US futures maintain their advance for a third straight day after posting strong gains earlier in the week.
In more detail, the major stock averages in the US notched their best trading session since March. The S&P500 and the Nasdaq Composite rallied by 2%, and 3%, respectively. In addition, the Dow Jones Industrial Average gained 1.4% on the day.
Overseas, European markets float fairly flat early on Wednesday after posting a winning day yesterday. This said the pan-continental Stoxx 600 soared 2.5% on Tuesday. Moreover, the French CAC40 rallied 2.9%, while the German DAX added 2.8%.
Against this backdrop, market participants seem to have put aside their Omicron worries. Last week, in comparison, the market retrenched as participants folded their bets in fear the new strain may darken the bright outlook.
It turns out, however, that the Omicron variant so far has a less-pronounced impact on health, particularly on vaccinated people.
What to Watch in the Crypto Markets?
Bitcoin, the leading token in the crypto market, is presently trading near $50,000 per coin. The orange coin has been moving to the upside for the past three days, after tumbling 21% on Saturday.
Further, the price of bitcoin is almost done recovering what it had lost over the weekend. In other words, bitcoin needs to recoup about $3,500 more to return to its level prior to the selloff. Back then, the token was floating near $54,000.
Ether, on the other hand, already regained its weekend losses. The Ethereum token is currently changing hands near $4,350 per token.
Economic Data Coming Up Today (EST times)
The Bank of Canada announces its interest rate decision in a press conference at 10:00 am. Also at 10:00 am, the US will publish its JOLTs Jobs Openings for October.