According to analysts at Westpac, risks are building for a more sustained topside breakout for the USD/CAD pair as it has rebounded sharply in recent days.
“Q4 GDP grew just 0.4% annualised, well below the BoC’s Jan MPR 2% forecast and consensus expectations at 1%. The BoC has characterised the slowdown as temporary and have been signaling plans to return the policy rate to neutral, albeit over time and dependent on the outlook. The risk is that the BoC waters down this lukewarm tightening bias yet further (though a more thorough treatment of their forecasts will need to await the April MPR).”
“Political risks seem to increasing too; an ethics controversy has engulfed PM Trudeau resulting in three high-profile resignations including two cabinet ministers. The Huawei executive arrest is creating a testy relationship with China too.”