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CANADA: Dovish Rates Reaction To BoC Gains Ground, FX Unfazed

CANADA
CanadaBulletMarketsFixed Income BulletsForeign Exchange BulletsNorth America
  • 2Y GoCs have extended a dovish reversal of what was initially, and only briefly, a small hawkish reaction to the BoC statements.
  • 2Y yields are now 3bp lower for -5.5bp on the day, setting new lows since 2022 in the process.
  • It sees the Can-US 2Y differential fall to fresh multi-decade lows of -142bps (-3bp post-decision, -5.7bp on the day).
  • BoC-dated OIS currently shows a rough 50/50 call for a 25bp cut or pause with the March decision, whilst CORRA futures are 2.5-3bp lower across the curve implying a terminal of 2.5-2.55% depending on spread assumptions.  

  • USDCAD meanwhile, at 1.4440, is still within a few pips of pre-announcement levels, remaining below the session high of 1.4472 and resistance at 1.4516 (Jan 21 high). 

     

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  • 2Y GoCs have extended a dovish reversal of what was initially, and only briefly, a small hawkish reaction to the BoC statements.
  • 2Y yields are now 3bp lower for -5.5bp on the day, setting new lows since 2022 in the process.
  • It sees the Can-US 2Y differential fall to fresh multi-decade lows of -142bps (-3bp post-decision, -5.7bp on the day).
  • BoC-dated OIS currently shows a rough 50/50 call for a 25bp cut or pause with the March decision, whilst CORRA futures are 2.5-3bp lower across the curve implying a terminal of 2.5-2.55% depending on spread assumptions.  

  • USDCAD meanwhile, at 1.4440, is still within a few pips of pre-announcement levels, remaining below the session high of 1.4472 and resistance at 1.4516 (Jan 21 high). 

     

image