CAD: US tariff threat raises BOC rate cut bets – BBH

FXStreet Insights Team FXStreet

USD/CAD surged almost 1% as US tariff threat raised Bank of Canada (BOC) rate cut bets, BBH's FX analysts report.

Canada's business investment is expected to remain subdued

"Markets price-in over 50% odds of a 25bps BOC policy rate cut in March and a total of 60bps of easing over the next 12 months vs. 40bps earlier this week. We expect the BoC to pause easing at its next March 12 meeting in part because core inflation (average of trim and median CPI) is tracking above the BOC’s Q1 projection of 2.5%."

"Canada monthly and quarterly GDP data are due today. Statistics Canada advance information indicates that real GDP by industry increased 0.2% m/m after falling -0.2% in November. The January GDP estimate will be published at the same time."

"Over Q4, the Bank of Canada (BOC) projects real GDP by expenditure at 1.8% SAAR vs. 1.0% in Q3 driven by consumer spending, residential investment, and net exports. Business investment is expected to remain subdued while inventory destocking is forecast to be the main drag to growth in Q4."

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FXStreet Insights Team

FXStreet

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EUR/USD deflates to fresh lows, targets 1.1600

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GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.