USD/CAD to climb towards 1.28 if BoC reaffirms the output gap will close by late-2022 – Scotiabank
|USD/CAD trades past 1.24 ahead of steady-handed Bank of Canada policy announcement. Economists at Scotiabank expect the USD/CAD pair to potentially rise towards 1.26 if the BoC pushes back against market pricing for an earlier start to the rate tightening cycle.
USD/CAD to plunge towards 1.23 on a more hawkish BoC
“We are very dubious on whether the BoC will make any concession to the output gap closing earlier than the middle of next year – which would be shorthand for earlier interest rate hikes. In other words, we expect the statement to push back against market pricing for an earlier (April) start to the rate tightening cycle.”
“The CAD is liable to soften towards 1.25 and might extend towards 1.26 if the BoC sticks with the view that the output gap will not close until later in 2022.”
“In the unlikely event of the bank sounding more hawkish and effectively endorsing current market pricing for rates, the CAD will rally towards the low 1.23s at least.”
See – BoC Preview: Forecasts from seven major banks, asset purchases to be cut
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.