BOC Meeting Opens Up Bearish NZDCAD Risks

BOC Up NextThe Bank of Canada meeting today is drawing plenty of attention with the BOC widely expected to hike rates by a further .25% on the back of last month’s unexpected rate hike. The BOC signalled at that meeting that further hikes would likely be necessary. Recent data out of Canada has highlighted resilience in the economy with the labour market remaining stubbornly tight and inflation proving sticker than previously anticipated. Hawkish ExpectationsIn light of the current macro-backdrop, the market is looking for a further hike today along with a fresh signal that the bank stands willing to do more if needed. If seen, this should keep CAD supported near-term, particularly against the Kiwi given the RBNZ pivot we saw overnight. If traders get a sense that further BOC hikes are likely, the divergence in monetary policy expectations between the BOC and the RBNZ should keep NZDCAD pressured near-term. In particular, traders will be paying attention to comments on the housing market. With house prices holding up despite around 4.5% worth of tightening, the bank’s comments on house prices might offer the clearest insight into its future rate expectations. Technical ViewsNZDCADThe pair is currently stalled into a test of the .8248 level resistance, within the overall bear channel. While this resistance holds, the focus is on a further move lower and a test of the .8051 level support next which if broken, opens the way for a move down to last year’s lows. To the topside, .8379 and the bear channel highs are the key levels to watch.