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GoCs Quickly Reverse Initial BoC Sell-Off, USDCAD Climbs

CANADA
  • 2Y GoC yields initially climbed 4bps but have fully reversed the move vs a 4bp climbg for Tsys after strong flash US PMIs.
  • USDCAD has lifted 50 pips to 1.3478, pushing back closer to yesterday’s high of 1.3492. Resistance is seen at 1.3542 (Jan 17 high).
  • The decision statement removed the explicit hiking bias but the separate presser opening statement (now released at the same time rather than with the presser) included a soft touch bias by not ruling out future increases.
  • It’s concerned about underlying inflation persistence but the 2024 inflation forecast was lowered from 3.0% to 2.8% (but a smaller move on a Q4/Q4 basis from 2.5% to 2.4%).

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