Home USD/CAD: Spot Over-Extended To The Downside Into BoC; 2 Reasons To Expect A Bounce N-Term – MUFG
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USD/CAD: Spot Over-Extended To The Downside Into BoC; 2 Reasons To Expect A Bounce N-Term – MUFG

The BoC holds its policy meeting on Wednesday. What are the expectations from the meeting?

Here is their view, courtesy of eFXdata:

MUFG Research discusses its expectations for [today’s] BoC policy meeting, and highlights 2 reasons why USD/CAD may be staging a bounce in the near-term.

“The BoC has committed to running the QE program “until the recovery is well underway”. That suggests  QE will persist into the middle of 2021. Any update on guidance is not likely until the next economic outlook update on 20th January,” MUFG notes.

Firstly, COVID, like in the US is escalating. The infection rate hit a new high on Monday of 7,895 and Canada’s close economic ties to the US means the outlook for economic growth over the short-term looks poor relative to the rest of the world.

Secondly, based on our short-term USD/CAD model, spot looks to have over-extended to the downside,” MUFG adds.

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Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.