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DOLLAR-CANADA: ###POV: 1.30 AT RISK HEADING INTO BOC
- The CAD has taken a hit on Gary Cohn's resignation as US NEC chair as he is
pro-trade & anti-tariffs. Today's BoC decision provides the immediate event
risk. The BoC is exp. to stand pat later today, with Trump's recently proposed
tariffs set to support the BoC status quo after Q4 GDP missed the
"data-dependent" BoC's forecasts on Friday.
- Any discussion surrounding the tough trade rhetoric out of the US will be eyed
in the BoC's statement & the fact that the decision will not have a press
conference adds scope for broader moves in the CAD, putting 1.30 at risk if the
BoC sounds a little more cautious on the outlook for trade negotiations.
- Another indicator to watch will be the US/CA 2-Year yield differential, which
sits at the highest level since June '17 (the BoC began its current hiking cycle
in July '17). It is also worth noting that the USDCAD 1-month 25-delta risk
reversal is sitting at the highest level seen since the July '17 meeting.
- Above 1.3000 there isn't much in terms of resistance; the 2% vol. band sits @
1.3060, with the 6mth channel top @ 1.3085, giving scope for upside extension.