BoC: Commitment to further policy normalisation continue to percolate - Westpac

According to Richard Franulovich, head of FX strategy at Westpac, doubts about the BoC’s commitment to further policy normalisation continue to percolate but only a very bare +12bp in BoC hikes are now priced over their next six meetings to September 2019.

Key Quotes

“Its a material decline from two months ago when rates markets discounted +70bp in BoC hikes over the same period.”

“USD/CAD has declined sharply in the new year pricing in some of the aforementioned positives but suspect it has further to run in H1, a test of key lows just below 1.28 (Oct 2018) on the cards. Recommended selling EUR/CAD earlier this week.”

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