Today is a big day for the Loonie, as two big news releases out of Canada will hit the markets. At 12.30pm GMT, the Canadian Trade Balance report will be released. The market consensus is for a surplus of 0.2billion CAD, which will be an improvement over the previous figure of 0.1billion CAD. An improvement by more than 0.3billion CAD would be Loonie-positive, and should trigger short-term USDCAD selling. A figure which is less than 0.099billion CAD would be Loonie-negative, and good for near-term buying of USDCAD.
The Bank of Canada will come up with its interest rate decision and the rate statement at 2pm GMT. While markets are unanimously expecting the BoC to leave rates unchanged at 1.75%, the focus will definitely be on the accompanying statement. Most central banks are all towing a dovish line as concerns for a global economic slowdown continue to mount. The last statement was non-committal; neither dovish nor hawkish.
The market is expecting a dovish shift this time around, which would increase the expectations of a rate cut happening in October 2019. It could also open up the door to more cuts in 2020 if need be. This may pressurize the CAD and allow the USD to gain on it, sending the pair above 1.3400.
An unchanged message or a hawkish tone is expected to disappoint the markets and could lead to Loonie strength, sending the USDCAD aggressively below 1.3300.
I would suggest that traders interested in trading the USDCAD pay more attention to the Rate Statement than the Trade Balance report.