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- BoC: Neutral bias – Westpac
BoC: Neutral bias – Westpac
Richard Franulovich, the head of FX strategy at Westpac, notes that the Bank of Canada (BoC) struck a neutral bias for yet another meeting, defying expectations for an explicit easing bias.
- “Their statement conveyed a notably more squeamish tone, the bank downplaying the upside surprise in Q2 growth and noting that, “escalating trade conflicts and related uncertainty are taking a toll on the global and Canadian economies”.
- The absence of an explicit BoC easing bias and the USD’s less steady tone in the wake of the lousy August ISM will provide USD/CAD with some breathing room to explore lower levels near term. However, rates markets are not getting carried away and neither should USD/CAD. OIS markets are still pricing in more than 80% chance of a BoC rate cut by their December 2019 meeting.
- US survey data underscore risks of a weaker Canadian growth path into year’s end. USD/CAD has room down to 1.3100- 1.3150 but the underlying choppy uptrend from Q4 2017 remains intact.”
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