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OIS gives a 90% interest rate cut, but the market is betting on the word
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Hello everyone, today XM Foreign Exchange will bring you "[XM Official Website]: OIS gives a 90% interest rate cut, but the market is betting on wording." Hope it will be helpful to you! The original content is as follows:
On Wednesday (September 17), the US dollar/Canadian continued to be relatively weak in the mid-term decline rhythm, trading around 1.3750. With the Bank of Canada (BoC) about to announce its interest rate resolution at 21:45 tonight and then hold a press conference, the "price spread-volatility" game before the incident is heating up, and North America's pre-market liquidity and spreads are expected to widen in stages.
State: Easing expectations heat up, but guidance will determine the direction
The market is consistently expecting that BoC will lower its overnight target interest rate by 25 basis points to 2.50%, and has been holding on for three consecutive times. The upward trend of the probability of easing xmserving.comes from three main lines: First, growth has weakened significantly - the actual economy in the second quarter has contracted by 1.6%, significantly worse than expected; Second, employment is weak - the total employment in July and August has decreased by more than 100,000, and the unemployment rate has risen to 7.1%; Third, inflation is generally controllable - the forecast of August's CPI of 1.9% year-on-year, lower than 2.0%, and the median core CPI remains at 2.6%.
Under this framework, CIBC analysis pointed out that inflation in August "did not pose a threat", which "provided a relatively easy decision" for this interest rate cut. However, the "pause" of the meeting on July 30 reminded the market that the pace of interest rate cuts is still constrained by sticky inflation. President TiffMacklem once emphasized that preference indicators such as correction mean and correction median are still around about 3%, and if the stickiness continues, the Council will remain vigilant.
At the same time, marginal changes in exchange rates and wages are forming a "drag-buffer" effect on inflation: the strong Canadian dollar, slowing wage growth rate, and negative expansion of output gap may all lower the medium-term inflation path. nationBank (NBC) analysis predicts that the board of directors will "reduce 25 basis points to 2.5%" after three consecutive wait-and-sees, with OIS implying a 90% chance of rate cuts.
Therefore, this risk point has turned more to forward guidance - if the statement emphasizes that "data dependence + inflation is still sticky", it may be interpreted as a slowdown; on the contrary, if it directly points to employment and growth fatigue, and implies that there is still room for subsequent space, the front end of the easing curve may further sink, and the short-term Canadian dollar is under pressure.
Technical:
From the 4-hour chart, the Bollinger middle rail is located at 1.3805, the upper rail is 1.3893, and the lower rail is 1.3716; after the exchange rate fell from the double high point of 1.3889-1.3924, it has fallen below the middle rail and runs near the lower rail. The current distance between 1.3754 and the lower rail is limited, and the short-term is in the stage of "weakness in the belt + lower rail retracement". The proximal low points 1.3725 and 1.3730 (and earlier 1.3721) form dense support clusters, and the lower rail is superimposed on 1.3716, forming a key defensive belt of 1.3725-1.3716.
MACD shows: DIFF is -0.0023, DEA is -0.0019, both are below the zero axis and DIFF is slightly lower than DEA, the bar chart is -0.0008, the kinetic energy is relatively empty and is still being released, and the trend continues to dominate. RSI(14) read 32.9843, approaching but not yet touching the oversold threshold of the traditional 30, prompting "the weakness is not extreme." In terms of resistance, the Bollinger middle rail of 1.3805 is the primary upward test. If you return to it, you can talk about the secondary confirmation of 1.3878/1.3889 and the upper rail 1.3893 and the previous height of 1.3924; if you lose the support belt of 1.3725-1.3716, the low-tempo rhythm may accelerate, and the psychological threshold of 1.3700 will become the next level observation position.
Prevention of market sentiment: Pricing is "90% sure", volatility may be "buy expectations, sell facts"
OIS has almost xmserving.completely included the 25bp interest rate cut, and market pricing focuses more on two points: ① Tone and path of statements and press conferences; ② How to express the weight of "sticky core inflation ≈ 3%". In terms of event structure, if "rate cuts as expected + neutral/slightly eagle-style guidance", there is a typical technical pullback risk of "realizing negative news". The Canadian dollar may strengthen in the short term and the exchange rate falls back to test 1.3725-1.3716; if "rate cuts as expected + further easing suggests strengthening", the front end of the curve will decline again, and funds may be biased towards defense under the background of cooling down of risk appetite, and the exchange rate is expected to return to above 1.3805.
Future Outlook
Short-term (event-driven, 1-3):
Short-term (exchange price upward): If the statement strengthens growth and weak employment and is open to further easing, short-term sentiment continues, the US dollar spread resonates with safe-haven demand, the exchange rate may retest the middle track of 1.3805, and then challenge 1.3878/1.3889 and 1.3893, and the pressure is still at 1.3924.The above range is prone to the form of "false breakthrough-back-test-reselect" and pay attention to whether MACD has a trend transition signal of "negative value convergence-zero axis upward shift".
More-scene scenarios (downward exchange rate): If the statement emphasizes inflation stickiness and policy patience, or implies a "evaluation period", a technical rebound dominated by the "expectation difference" may lower the exchange rate, and observe whether 1.3725-1.3716 can be effectively broken down. If the physical K-line closes below 1.3716 and fails to xmserving.complete the backtest, the downward space will be opened, the psychological level of 1.3700 enters the field of vision, and after the RSI falls below 30, it will pull back to around 30 again, forming a xmserving.common rhythm of "weak repair - downward pressure again".
The above content is all about "[XM official website]: OIS gives a 90% interest rate cut, but the market is betting on the wording". It is carefully xmserving.compiled and edited by the editor of XM Forex. I hope it will be helpful to your transactions! Thanks for the support!
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