What is the outlook for CAD this week, given that the Bank of Canada meets on Wednesday?
Here is their view, courtesy of eFXdata:
MUFG Research discusses its expectations for this week’s BoC policy meeting.
“The BoC is expected to acknowledge the stronger growth outlook at this week’s policy meeting. Growth in Q4 was twice as strong as the BoC had expected. It is encouraging expectations that the BoC will eventually bring forward plans to tighten policy…The BoC will face a difficult challenge if it wants to dampen the pace of the move higher in Canadian yields in light of improving fundamentals. The BoC is likely to reiterate that it does not plan to raise rates until 2023 at the earliest,” MUFG notes.
“The higher price of oil and favourable yield spread developments continue to favour a stronger CAD. It will be hard for the BoC pushback this week,” MUFG adds.
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