NAFTA risks not enough to derail BoC to hike 25 bps tomorrow - TDS
|"Despite the NAFTA risks that lie beyond, we do not think it will be enough to derail the Bank to hike 25bps tomorrow," TD Securities analysts note.
Key quotes
We note however that the NAFTA tape bombs have introduced more two-way risk for CAD around the decision, we think trade concerns lead to more cautious messaging from the Governor, suggesting that a knee-jerk reaction towards CAD strength should be faded. Further, we doubt that Poloz will look too kindly to roughly 3 hikes priced into the curve (by October) at the moment.
We think the market pricing in as much cumulative tightening as the Fed NAFTA risk and the debt overhang will be motivators for a more cautious profile. As such, we see value in playing CAD on the short-side with NOK and EUR as preferred pairs.
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.