Canada: Solid growth momentum has resumed - Westpac

Sandeep Kanihama FXStreet Contributor

Richard Franulovich, Research Analyst at Westpac, suggests that solid growth momentum for Canadian economy has resumed; strong Feb GDP (+0.4%), seven year highs in the IVEY PMI, continued decent momentum in (full time) employment and a big uplift in March manufacturing sales (+1.4%) among the more notable data in recent weeks.

Key Quotes

“That, fading NAFTA risks and a firming terms of trade backed by 3 ½ year highs in crude oil prices will underwrite the BoC’s growing confidence in the recovery.”

“Markets lean strongly in favour of a hike at their next MPR, pricing in an 88% chance, though their next meeting May 30 is receiving some attention too, markets pricing in a 32% probability. Would not entirely rule out a May 30 hike but suspect the BoC’s focus on helping enhance the supply side of the economy will win out, leaving them sidelined, albeit with a stronger signal that a another hike is coming soon.”

“CAD should continue to outperform amid heightened BoC hike risk and persistently firm energy prices.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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