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With major central banks around the world hiking interest rates to combat rising inflation levels, the Bank of Canada is all set to announce its rate decision on Wednesday, September 7, 2022. Canada’s much-awaited jobs report is also scheduled for release this Friday.
What steps has the Bank of Canada taken so far to combat inflation?
The Bank of Canada increased the target for its overnight rate by one percentage point to 2.5% during its July 13 meeting, surprising most analysts, who were just expecting a 75bps increase. Such a big hike has not been seen since 1998.
What are the expectations from the upcoming meeting and jobs report?
The Bank of Canada signalled that more interest rate hikes are expected in the upcoming meetings to combat surging inflation. The committee noted that inflation is more persistent than projected and is expected to remain at about 8% in the upcoming few months. The bank also cut its growth estimates for 2022 and 2023, as tight financial conditions might ease demand levels in the economy.
Canada’s economy shed 30.6K jobs in July, following a 43.2K decline a month ago, missing market estimates of a 20K increase. The markets are expecting some recovery in the jobs market in the upcoming report.
Use the interest rate decision and jobs report to trade the USD/CAD pair
The CADUSD, which has dropped almost 2% over the last month, might make a strong rebound if the jobs report is better than expected. The interest rate decision is also expected to significantly impact the forex pair.
Be ready to make the most of market moves during this big week for the Loonie.
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