The Canadian dollar had a very exciting week, reaching new lows before being lent a helping hand from the BOC and oil prices. What’s next?
Here is their view, courtesy of eFXnews:
The Bank of Canada (BoC) left rates unchanged this week disappointing some expectations for a rate cut.
“Although the accompanying Monetary Policy Report included a downward revision to economic projections, recent weakness in the CAD and anticipation of fiscal spending appear to have prevented the BoC from cutting rates,” notes BNP Paribas.
This week’s inaction led to a corrective CAD rebound and some clearing of the CAD short positioning overhang.
“However, in our view, USDCAD remains on an upward trend as US-Canadian policy divergence remains intact.
We have updated our USDCAD forecasts and now expect the pair to reach a peak of 1.50 in Q3 2016,” BNPP projects.
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