The Bank of Canada meets on Wednesday with the expectations of a 25 basis point hike to 4.5% from 4.25%. That would take the overnight rate to the highest level since 2008. Would that be it for the Bank of Canada?
Since March 2022, the price has moved from near 0% to 4.5%. That is a big job and a large impact on the variable-rate mortgages in Canada as well. Now the bank can addresses policy going forward will be what market participants will be paying attention to on Wednesday.
Technically, the price today initially moved lower into the early European session, but found the support buyers near the level of a swing area between 1.3344 and 1.3358 (the level reached 1.3341 before rotating back to the upside). That low swing area comes ahead of the extreme low from January 13 to 1.33204. Sellers had their shot on that break, but they failed.
The move to the upside today saw the price extend up to its 200 hour moving average 1.34128. The high price reached 1.3417 which is short of the next key target at the 100 hour moving average at 1.34268. The price is currently trading at 1.3398.
From my technical respective getting above the 100 hour moving average, and a higher swing area between 1.34369 and 1.34441 would be needed to open the door for further upside momentum (see red box on the hourly chart above). There is room to the upside with the 100 day moving average at 1.35079 they target. That is near the 50% midpoint of the January trading range 1.35024.
Conversely, if the BOC and bias turns more hawkish (higher CAD), and the price moves back below 1.3344 and then below the January low level at 1.33204, traders will be looking toward a upward sloping trendline on the daily chart at 1.3284 followed by the swing lows from November near 1.3229.