BoC: Heavily focused on trade risks - Westpac

Sandeep Kanihama FXStreet Contributor

According to Richard Franulovich, Head of FX Strategy at Westpac, the BoC remains heavily focused on trade risks, Governor Poloz noting that evidence of tangible negative impacts was accumulating.

Key Quotes

“Despite that the BoC has little appetite for an easing bias – for the time being - growing confidence in domestic demand a key offsetting factor.”

“That, and a dovish Fed has seen yield spreads rapidly compress back in CAD’s favour, the 10yr CA-US spread for example is now -45bp versus -85bp three months ago.”

“With yield spreads tracking strongly in CAD’s favour and the pair’s correlation with yields firming any topside in USD/CAD is likely to be limited to no more than 1.32.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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