Ladies and Gentlemen,
As the Davos Economic Forum commences, with 40 Heads of State attending and a ticket cost of $27,000, away from listening to speeches and headline watching the main event will be in Canada.
At 15:00 GMT the Bank Of Canada make their rate announcement, followed by the quarterly Monetary Policy Report and Economic Forecast update at 16:15 delivered by Governor Poloz.
Why is this significant? The first full rate cut is priced for April 2016, however the Canadian $ is a currency strongly correlated to the price of Oil. Areas such as ‘Alberta Oil Sands’ have been heavily affected by the oil price hitting a 12 year low. The weaker price has heavily impact the economy, will the BOC take action?
Highlighting the strong correlation, this year the Canadian $ has been in freefall with 10 consecutive negative days, however yesterday when the Relative Strength Index (RSI) reached 87 we had a corrective move but has made fresh highs again today 1.4655, this area acts as a level of resistance.
Toronto Dominion Bank have gone for an ‘off consensus call’ for today’ event and expect the overnight rate to be cut by 25 basis points from 0.5% to 0.25%.
They state that ‘the currency weakness plays an important role in facilitating the rotation in the drivers of economic growth at the core of the BOC growth narrative’
Today Oil and Canada might grab the headlines, whilst the world leaders gather in the Swiss snowy peaks.
Good Luck
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