The Canadian dollar recovered after the big blows, thanks to the bounce in oil prices. Will OPEC deliver on May 25th? The loonie also faces the Bank of Canada, which may be more dovish given the recent slide in inflation. What can we expect? Here are four opinions:
Here is their view, courtesy of eFXnews:
CAD 3-5% Overvalued; BoC On Hold With A Neutral Stance;  – BofAML
Bank of America Merrill Lynch Research expects the Bank of Canada (BoC) to remain on hold in its 24 May meeting.
“We see the BoC on hold in May with a neutral statement as growth and inflation diverge. We expect BoC to hike in 1Q18,†BofAML adds.
On the CAD front, BofAML argues that the BoC’s likelihood of staying on hold this year should continue to be supportive of BofAML’s overall negative view on CAD, with modest smaller upside for USD-CAD.
“This stance is against recent market moves, where CAD has rallied a bit on the back of oil prices in past days. However, we continue to look for CAD to sell off modestly to 1.39 by the end of the year, primarily because we still look for interest rate differentials to imply a higher USD….
At present, we would see CAD as around 3-5% overvalued combining the information from both rates and commodities markets,†BofAML argues.
OPEC May Extend Output Cut Deal This Week; BoC On Hold;  – Citi
Citi Research expects the Bank of Canada (BoC) to keep the interest rate unchanged at its policy meeting on Wednesday.
“If the BOC says to use other property market measures to solve the housing issue instead of interest rate policy, CAD may be underpinned,†Citi argues.
In addition, Citi also notes that CAD investors will focus on the outcome of the OPEC meeting on Thursday.
“OPEC may extend output cut deal by 9 months this week, which may support oil prices and underpin CAD,†Citi adds.
BoC A Non-Event; Focus On OPEC Meeting On Thursday – Barclays
