Loonie rallies ahead of the BoC monetary policy announcement, with an expectation that rates will remain at 1.75 percent.

Daily Currency Update

CAD - Canadian DollarThe USD/CAD was trading at 1.3041, falling 0.21 percent (stronger Loonie) ahead of the BoC monetary policy announcement. According to Bloomberg Economics, the Monetary Policy Report will show economic growth headwinds coming from December; therefore, impacts will be felt by the Loonie if the BoC changes its view on its flexibility regarding how to tackle the recent economic slowdown. If the BoC’s view changes from temporary to persistent, the Loonie will be driven lower. If the BoC keeps saying that this is a temporary situation (regarding the recent economic slowdown), the Loonie will be driven higher. The announcement will take place at 10:00 am, and it is anticipated that the BoC will keep the rate at 1.75 percent. BoC’s Poloz will speak to reporters at 11:15 am EST. For now, the BoC’s October economic growth forecast is 1.3 percent; however, Bloomberg Economics has a growth forecast of only 0.1 percent. Nonetheless, the BoC might also feel alleviated from positive international trade developments. Inflation numbers were released a few minutes ago, and they are pulling the Loonie back from session highs due to a miss on headline inflation. Inflation came in at 2.2 percent, versus the 2.3 percent expected.