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Analysts at Credit Suisse expect USD/CAD, which is trading at 1.3523 ahead of the BoC’s meeting, to continue to track the broader USD, which is consistent with a test of the second half of 2019 highs around 1.3320-1.3340 ahead of the 15 July BoC meeting. 

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Key quotes 

“Our bias beyond today’s meeting and ahead of the 15 July meeting, remains mildly constructive on CAD, which leaves us looking to fade rallies in USD/CAD above 1.37 and aiming for a re-test of the 1.3320-1.3340 area where the cross stalled repeatedly in 2019.”

“We see very limited risks of fiscal stimulus being withdrawn or reduced sharply in Canada in the coming months, whereas a more considerable risk is emerging in the US on that front in mid-July, as a by-product of recent social unrest.” 

“With the WTI-Western Canada Select oil benchmark spread still below $10bn, and without the rail transport bottlenecks that have plagued the sector for years, our view is that Canada would be able to benefit fairly quickly and directly from further strength in oil prices.”