The Bank of Canada turned somewhat more optimistic in the most recent rate decision and the optimism helped lift the loonie. This comes despite falling oil prices, a key export for Canada. What’s next for CAD? The team at Credit Agricole explains: Here is their view, courtesy of eFXnews: CAD is leading gains in the G10 overnight after the BoC kept it policy rate on hold at 1.0%. The statement provided the marginal boost to CAD as the BoC painted an upbeat picture of the Canadian economy. For instance, it noted that, “Canada’s economy is showing signs of a broadening recovery.” In their view this is driven by stronger exports and increased business investment – both a reflection of the strengthening US economy. What’s more, the BoC also noted that given the net effect of the recent developments, the output gap appears to be smaller than the Bank had recently projected. These are welcome signs from the BoC and they helped lift CAD as the market anticipates a less neutral policy bias in 2015. The market is now pricing in 25bp worth of hikes in the policy rate over the next year. However, the language on inflation was a bit murky. It noted that inflation has risen more than projected in the October Monetary Policy Report but focused on the temporary nature of the price increases to downplay the inflationary outlook. Even so, we think the decline in the output gap should place wages on a more stable footing in 2015. For CAD, we think the combination of a more upbeat BoC and stable oil prices suggest scope for mild rally over the coming weeks. Indeed, we think the “oil” links to CAD are a bit exaggerated given Canada’s oil exports account for only 5% of GDP. Oil related investment in Canada’s also accounts for a little less than 5% of GDP. In the G10 we think NOK is a much better oil proxy given oil exports account for a much larger share of GDP (18%). As such, we look for tactical decline in USD/CAD over the coming weeks and target a move back to 1.1222. For lots more FX trades from major banks, sign up to eFXplus By signing up to eFXplus via the link above, you are directly supporting Forex Crunch. Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Opinions share Read Next Euro Rises as ECB Leaves Rates Unchanged and Delays Guest 8 years The Bank of Canada turned somewhat more optimistic in the most recent rate decision and the optimism helped lift the loonie. This comes despite falling oil prices, a key export for Canada. What's next for CAD? The team at Credit Agricole explains: Here is their view, courtesy of eFXnews: CAD is leading gains in the G10 overnight after the BoC kept it policy rate on hold at 1.0%. The statement provided the marginal boost to CAD as the BoC painted an upbeat picture of the Canadian economy. For instance, it noted that, "Canada's economy is showing signs of a broadening… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.