BoC to stay on hold, USD/CAD subject to downside pressure
|The Bank of Canada (BoC) is broadly expected to leave its benchmark rate unchanged at 0.50% today. The central bank will go on with its neutral approach as Governor Poloz does not want to derail the ongoing recovery. Despite a setback in the first quarter, inflation has been slowly moving toward the centre of the target band. On the growth side, the Canadian economy has been able to maintain a positive momentum and grew 2.5% y/y in February.
Besides the highly uncertain oil prices path, the President Trump threat remains one of the main concerns. After introducing tariffs on timber imports from Canada, a re-negotiation of NAFTA will be another painful shock for the economy. Therefore, we anticipate that the BoC will mainly stress the uncertainties surrounding the inflationary outlook and the threat of a tighter trade relationship with the US.
USD/CAD’s reaction should remain limited. The currency pair is currently erasing early morning gains and returned to 1.3510. We remain bullish on the pair as we expect market participants will slowly start to switch attention towards the Fed’s tightening path and reload bullish bets on the greenback.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.