Technical Analysis

Canadian dollar faces risks from Bank of Canada survey at the bottom of the hour

The market is pricing in a 70% chance of the Bank of Canada hiking by 25 bps on January 25 with the remainder at no change.

Those numbers will swing after today’s BOC business outlook survey and could put the central bank in a tough spot. Recent data on jobs and inflation have been hot but those are backward-looking numbers. The October BOC quarterly survey already showed a slowdown in business conditions.

In addition, short-term inflation expectations and input/output prices fell.

Perhaps most-importantly, the metric on futures sales fell to +18 from +57.

Another sharp drop in sentiment, inflation expectations and future sales should give the BOC major pause in regards to hiking again this month.

Notably, this release will be landing in a holiday-thinned market and that’s something that could offer an opportunity to retail traders.

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