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June 7, 2021

The Week Ahead: BOC, ECB & CPI

Bart Kurek

Let's look at the news event's we've got lining up this week...

(CAD) BOC Rate Statement

The Bank of Canada (BoC) is the central bank of Canada which is responsible for the stability of the Canadian Dollar currency, full employment, and economic prosperity and welfare of the Australian people. This is the primary tool the BoC uses to communicate with investors about monetary policy, as they discuss the economic outlook and offers clues on the outcome of future decisions.

The BoC is expected to keep interest rates on hold at 0.25% for the time being. However, many are still expecting The BoC to hint at tapering stimulus soon, possibly for their July policy decision if the economic recovery and vaccination rollout continues to progress.

(EUR) Monetary Policy Statement

The primary objective of the European Central Bank's (ECB) monetary policy is to maintain price stability. Monetary policy operates by steering short-term interest rates, thereby influencing economic developments, in order to maintain price stability for the euro area over the medium term.

No policy changes are expected from the ECB and policymakers are expected to dodge taper talks. Keep in mind that the eurozone economy isn’t exactly ahead of its peers when it comes to bouncing back from the pandemic. Significant upgrades in growth and inflation could mean some upside for the shared currency.

(USD) CPI

The USD Consumer Price Index (CPI) report is releasing on Thursday, which measures the change in the average price basket of goods and services by consumers, which can be anything from food, transportation and medical care. Changes in the CPI are used to assess price changes associated with living in the country. It is one of the most used statistics to identify periods of inflation or deflation.

Analysts expect headline inflation to dip from 0.8% to 0.4% in May, while the core version could slide from 0.9% to 0.4%. This could cause additional weakness on the USD considering the latest NFP numbers fell short of estimates once again and could keep FED tapering hopes alive.

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