Analysts at TDS explain that the Canada’s winter Business Outlook Survey sounded much like the autumn edition, notably on capacity pressures and pointing to diminishing labour market slack, despite some moderation in the sales outlook.
“Not that Governor Poloz needed more strong data to hike next week, but this report certainly adds to a series of reports supporting the case for policy normalization.”
“Rates: Ahead of the BoC interest rate announcement the path of least resistance will be towards higher rate and/or underperformance versus Treasuries. In the near-term, we continue to favour 2s5s steepeners.”
“FX: The report did little to stir CAD. After closing our short USDCAD trade on Friday, we remain biased for a pushback above 1.25 in the short run amid unpriced NAFTA risks.”
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