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Forex Today: Bank of Canada Expected to Cut Overnight Rate to 4.75%

The Bank of Canada is widely expected to cut its Overnight Rate at its policy meeting by 0.25% to 4.75%.

  1. The Bank of Canada will be holding a policy meeting today at which it is expected to cut the Overnight Rate from 5.00% to 4.75% ahead of the European Central Bank making a similar cut tomorrow. If the Bank passes on the cut, it will be a major hawkish surprise for the Loonie (Canadian Dollar). Conversely, if the cut is stronger, say 0.50%, it will be a major dovish surprise.
  2. The market continues to take a more dovish expectation on the pace of US rate cuts as there are increasing economic indications that the US economy is really starting to cool down. 65% now expect the Fed to cut rates by 0.25% at its policy meeting in September after yesterday’s JOLTS Job Openings data showed its lowest reading in 3 years. This has boosted stocks, but the US Dollar has recovered slightly over the past couple of days.
  3. Indian markets are showing continued volatility following the election results from the weekend, it is now clear the government has won election but without a landslide. The Indian Rupee has gained over the past day, with the benchmark USD/INR currency pair falling to 83.43.
  4. In the Forex market, the strongest major currency since the Tokyo open is the Australian Dollar, while the Japanese Yen is the weakest major currency, putting the AUD/JPY currency cross in focus. The Japanese Yen advanced very strongly yesterday and is now bouncing back on a similarly high level of volatility, making the Yen very interesting to traders, especially Forex day traders.
  5. WTI Crude Oil futures are trading near a 4-month low amid increasing evidence US stockpiles are rising.
  6. The precious metal Silver has finally broker below the pivotal support level at $29.85. Trend traders will probably want to be exiting any long trades here now.
  7. Yesterday’s release of Swiss CPI data came in exactly as expected, holding steady at a monthly rate of 0.3%.
  8. Australian GDP data released a few hours ago came in lower than expected, showing annualized growth of only 1.4%.
  9. There will be a release of the ADP Non-Farm Payrolls forecast in the USA later today, followed by ISM Services PMI data.

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