Bank of Canada causes 116 pip volatility

Note: This section contains information in English only.
Source: Dukascopy Bank SA
On September 8, the Bank of Canada published its Overnight Rate and published the BOC Rate Statement. In general, the central bank announced that it would continue its monetary stimulus program. In addition the bank commented on the economic recovery of the country.

Quoting the statement: "The Bank of Canada today held its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank is maintaining its extraordinary forward guidance on the path for the overnight rate. This is reinforced and supplemented by the Bank's quantitative easing (QE) program, which is being maintained at a target pace of $2 billion per week.

Consumption, business investment and government spending all contributed positively to growth, with domestic demand growing at more than 3 percent. Employment rebounded through June and July, with hard-to-distance sectors hiring as public health restrictions eased. The Bank continues to expect the economy to strengthen in the second half of 2021, although the fourth wave of COVID-19 infections and ongoing supply bottlenecks could weigh on the recovery."

Monetary Policy Statement

Bank of Canada maintains policy rate, continues forward guidance and current pace of quantitative easing

As the announcement was made, an initial minor dip of 20 base points was followed by a 116 base point surge. However, in the following two hours, the USD/CAD returned to previous exchange rate levels.

On a larger scale, the event caused an increase of volatility between the 1.2650 and 1.2750 levels. Meanwhile, note that the pair has been surging since midnight to September 07.

Initial Reaction

Larger scale situation

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Actual Topics

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