BoC causes 150 pip move

Note: This section contains information in English only.
Source: Dukascopy Bank SA
On April 21, the Bank of Canada made a rate statement, which created a long unseen move. During the first half an hour after the statement, the USD/CAD had already dropped by almost 150 pips due to the strengthening of the Canadian Dollar.

The move occurred due to the bank announcing that it expects inflation to return to the target in the second half of 2022. Compared to other banks, that is a more positive outlook. Due to that reason, compared to other currencies, the Canadian Dollar is unlikely going to be in as high supply as others.

Quoting the reports key points: "The Canadian economy showed impressive resilience during the second wave of the pandemic, and estimates of growth in the first quarter have been revised up significantly.

With the greater resilience of the Canadian and global economies, progress on vaccinations, continued fiscal and monetary policy support, and higher commodity prices, the overall Canadian outlook has been revised up from the January Report.

In the near term, inflation is expected to rise temporarily to around the top of the 1 to 3 percent inflation-control target range, largely reflecting base-year effects and gasoline price dynamics. The Bank tends to look through such temporary movements.

In view of the more favourable economic outlook, the Bank now expects slack will be absorbed and inflation will sustainably return to target some time in the second half of 2022. This timing is more uncertain than usual, however, given the uncertainty around potential output and the highly uneven impacts of the pandemic."

Full Official Release Monetary Policy Report

In the immediate aftermath after the statement, the USD/CAD plummeted 149 pips. On a larger scale, note that the rate pierced the previous April low levels.

Initial Reaction

Larger scale situation

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Thu, 22 Apr 2021 12:15:26 GMT

ECB policy remains unchanged

On April 22, the European Central Bank published its Monetary Policy Statement. In general, the event caused no initial reaction in the market. It occurred due to the rate keeping their policy unchanged. In addition, it was no surprise due to the fact that the ECB recently increased their monetary stimulus policy. Quoting the reports key points: "The interest rate on

Thu, 15 Apr 2021 17:06:39 GMT

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