The Canadian dollar enjoyed the excellent jobs report and also liked the bullish BOC business survey. Oil prices have reached the highest levels since December 2014. Yet against the strength of the US dollar, perhaps something is missing. Will a BOC rate hike make an even bigger splash?
Here is their view, courtesy of eFXnews:
BTMU FX Strategy Research discusses USD/CAD outlook and think the pair is likely heading lower into BoC’s January meeting next week, where BTMU expects the central bank to deliver a rate hike.
“It is understandable that market participants have brought forward expectations for the next BoC rate hike to later this month on the 17th January. It supports our call for a January rate hike as well.
The increased likelihood of an earlier BoC rate hike and higher price of oil should both encourage a stronger loonie in the near-term If the BoC delivers a rate hike this month as well, it could encourage USD/CAD to retest the low from September at 1.2062,†BTMU argues.
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