The Canadian dollar has recovered some of its recent losses at the start of this week ahead of the Bank of Canada meeting on Wednesday. Omicron's emergence will mean the BoC will tread carefully, in the view of economists at ING, who expect only a limited impact on the loonie.
Expecting a limited impact on CAD
“We believe that a cautious approach this week by the BoC given the lingering uncertainty around the risks and economic impact of the new variant should not surprise the market and hit CAD as long as policymakers do not go as far as signalling there are risks of a deviation from current policy plans.”
“We think the BoC won't surprise markets and that CAD will be only marginally impacted by the policy meeting this week, leaving the currency almost solely driven by external factors for now.”
“Barring a major setback to the global economy due to the Omicron variant, we still expect USD/CAD to consistently trade below 1.25 in 2022.”
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