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CANADA: BOC Close Call Leaves CAD in Short-Term Focus

CANADA
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  • External factors have recently seen Bank of Canada market pricing shift moderately in favour of reverting to a 25bp cut rather than a second 50bp cut on December 11. However, given it’s still close to a 50/50 decision, the bar appears low for a market surprise on today’s release of Canada CPI. The ongoing strength of the US dollar in the aftermath of the US election and the relative weakness of the Euro will keep close market attention on both USDCAD and EURCAD following the data.
  • Higher-than-expected data and an accompanied hawkish repricing may provide further impetus for EURCAD (shown below) to have a deeper correction lower. With headlines surrounding Russia and Ukraine thrusting European geopolitical uncertainty back into the spotlight this morning, EURCAD may be particularly vulnerable to a more protracted move lower for the single currency.
  • Full piece here: FX Market Analysis - CAD 19-11.pdf
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  • External factors have recently seen Bank of Canada market pricing shift moderately in favour of reverting to a 25bp cut rather than a second 50bp cut on December 11. However, given it’s still close to a 50/50 decision, the bar appears low for a market surprise on today’s release of Canada CPI. The ongoing strength of the US dollar in the aftermath of the US election and the relative weakness of the Euro will keep close market attention on both USDCAD and EURCAD following the data.
  • Higher-than-expected data and an accompanied hawkish repricing may provide further impetus for EURCAD (shown below) to have a deeper correction lower. With headlines surrounding Russia and Ukraine thrusting European geopolitical uncertainty back into the spotlight this morning, EURCAD may be particularly vulnerable to a more protracted move lower for the single currency.
  • Full piece here: FX Market Analysis - CAD 19-11.pdf