Today market outlook

[Zeologic]

USDCAD hovers ahead of BOC interest rates

USDCAD price hovers near 1.38500 resistance ahead of today's BOC interest rate announcement. Yesterday the price drew a small body bearish candlestick with a high of 1.38370 and a low of 1.38129 indicating a low volatility market. The bullish sentiment seems to be fading somewhat ahead of the BOC rate call.

The BOC is predicted to cut interest rates by 50 bp from the previous 4.25% to 3.75%. Looking at Canadian inflation data in 2024 from the declining first and second quarters gives hope that the expected 50 bp rate cut may become actual. CPI inflation in the first quarter showed 2.8 and fell in the second quarter by 2.7. Meanwhile, the Chain price index for GDP data rose from 3.5 in the first quarter to 3.9 in the second quarter.

On the other hand, the uncertainty of the US election still raises questions about who will be the winner. Although Trump may emerge as the winner, market sentiment is still nervous.

Today investors will focus more on the BOC's monetary and interest rate reports which can have a direct impact if the actual data differs greatly from expectations.

[Zeologic]

EURGBP rises ahead of PMI data release

Yesterday's EURGBP price rose drawing a long body bullish candlestick and there was a shadow at the bottom of the candle. The price formed a low of 0.83028 and a high of 0.83441 and moved up near the middle band line.

The pair faces challenges due to market rumors that the ECB will cut interest rates again in December. The rumors emerged after Reuters reported on Wednesday that European Central Bank (ECB) policymakers had begun debating whether interest rates would need to fall below neutral levels during the current easing cycle. Currently, the ECB interest rate is 3.40%, which has decreased from the previous 3.65%.

Sterling also faces headwinds following falling consumer and producer inflation rates, along with weak labor market data in the UK, which boosted hopes of the Bank of England cutting interest rates by 25 bp in November. The BoE interest rate is currently still at 5.00%.

Investors today will focus on several important news events from BOE Governor Andrew Bailey's speech which could provide clues to a hawkish or dovish statement. Apart from that, investors will also focus on PMI data from several European countries, the US and the UK.