CAD: Will need an ultra-hawkish BoC message to drive the loonie higher - ING


"The Bank of Canada meeting (Wed) will be the highlight of the week; the central bank is likely to continue its gradual tightening path and provide a 25 basis point rate hike," point out ING analysts.

Key quotes

"This should be no surprise, as headline inflation has been out of the BoC’s comfort zone for some time now, hitting what it sees as its upper threshold of 3% YoY in July. And with all three of the main core measures floating around the 2% target, there is little reason for the BoC to hold off on pushing policy rates higher. Market expectations have marginally cooled over recent weeks (now only 78% priced in versus 95% at the start of the month). A follow-through of a hike should give CAD a knee-jerk boost; however, with a 100bp of tightening already priced in over a 2-year horizon, we think there's limited scope for a sustained rally in CAD - unless the BoC send an ultra-hawkish signal."

"We see this as highly unlikely - with the fragile global market environment, uncertainty over global trade and mixed Canadian data of late (in particular weak wage growth) likely to see a more 'dovish hike' from the BoC. We, therefore, wouldn't be surprised to see USD/CAD snapback higher following an initial post-meeting fall. Our short-term view remains that we see USD/CAD stabilising in the 1.28-1.30 range – with no directional conviction."

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD remains below 1.1750 on dismal German IFO, risk-off mood

EUR/USD is holding steady below 1.1750 after German IFO surprised to the downside. Hawkish Fed, Evergande risks amid stimulus hopes keep investors wary. The US dollar attempts a bounce amid a cautious mood, firmer Treasury yields. Powell’s speech awaited.

EUR/USD News

GBP/USD battles 1.3700 amid risk-aversion

GBP/USD is battling 1.3700, as the US dollar holds its bonce amid worsening market mood. The pound reverses hawkish BOE-led gains, as Brexit woes and China Evergrande uncertainty weigh. Focus shifts to Powell's speech. 

GBP/USD News

XAU/USD clings to gains above $1,750, upside seems limited

Gold gained some positive traction on the last trading day of the week and recovered a part of the overnight slump to the lowest level since August 11.

Gold News

Axie Infinity nears the end of bearish outlook as AXS contemplates 25% gains

A brief technical and on-chain analysis on Axie Infinity price. Here, FXStreet's analysts evaluate how AXS behaves as it trades above key support.

Read more

German Elections Preview: Three EUR/USD scenarios for the post-Merkel dawn

Who will succeed Angela Merkel at the helm of Europe's largest economy? The long-serving beacon of stability is stepping down as Germany's Chancellor after 16 years, and her big shoes leave a hole in the old continent's leadership. 

Read more

Forex MAJORS

Cryptocurrencies

Signatures