BoC Gov Poloz’s more tempered tone (“untapped potential in labour markets”) and heavy stress on data dependence has doused BoC hike expectations yet further, according to Richard Franulovich, Research Analyst at Westpac.
Key Quotes
“OIS pricing was +55bp in hikes by Dec 2018 but now stands at +45bp.”
“NAFTA/tariff risks are overdone. CAD is the weakest G10 currency year to date and notably weaker than MXN.”
“Risks to Canada’s growth profile are if anything slowly tipping higher, amid a weaker CAD, steady oil prices, still accommodative financial conditions and firming US growth.”
“USD/CAD overdone to the topside into 1.30, sustained strength in the 1.30-1.35 unlikely.”
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EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
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