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The Bank of Canada (BoC) statement won’t do many favors for the loonie in the short-run, which reinforces our long bias in USD/CAD, per TD Securities.

Key quotes

“The BoC eschewed a base-case forecast in lieu of a scenario analysis to show the impact of COVID-19. The scenarios reflected growth impacts ranging from -1 to -3% for Q1 and -15 to -30% for Q2 (nonannualized), measured from the peak in Q4.”

“The Bank noted that inflation could fall to 0% y/y for Q2.”

“The upshot is to reinforce that the 1.40 level should remain a floor over the coming months. For now, we remain long USD/CAD with a target of 1.4650.”