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.
"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."
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