Analysts at Nomura remains bullish on USD/CAD despite a hawkish outcome from the BoC.
Key Quotes:
“Strategy implications We were surprised by the steps taken today by the BoC. While the renegotiations of NAFTA remove some uncertainty, growth rates are slowing. The global picture remains uncertain.”
“Against this backdrop it is a surprising time for the BoC to signal less data dependence (i.e. flexibility). We expect Canadian growth rates to moderate further. We still believe the market is too positive on its pricing of the BoC versus the Fed, but the onus is on the data now to help this outlook be realised.”
“In the meantime, we should not ignore the BoC wanted to send a message that its reaction function is shifting to be less data dependent. This comes at a time when the Fed is turning more data dependent.”
“We still believe the path for USD/CAD is a grind higher. However, after today’s meeting our conviction is lower on the margin.
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