BoC to reduce bond purchases from $4 billion per week to $3 billion – TD Securities

Eren Sengezer FXStreet

Previewing the Bank of Canada's (BoC) policy meeting, TD Securities analysts said that they expect the bank to reduce its government of Canada (GoC) bond purchases from $4 billion per week to $3 billion per week, as reported by Reuters.

Key quotes

"In light of the much stronger than expected economic data over the last quarter, there is a risk of a more hawkish statement. We now look for the BoC to lift rates in October 2022."

"Taper and growth upgrades are expected, but a hawkish surprise in the form of an earlier output gap closure and hence earlier lift to rates could easily reignite CAD performance. Taken together with well-supported risk sentiment and a pivot in the Treasury market, we see greater scope for USDCAD to re-test its Covid cycle lows on a hawkish surprise. We also find appealing risk/reward to fade EURCAD rallies towards 1.50."

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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