Scope for a more-hawkish BOC this week; staying short USD/CAD - Credit Agricole

Author: Adam Button | Category: Central Banks

The Bank of Canada decision is December 6

Credit Agricole CIB FX Strategy Research discusses USD/CAD outlook into the BoC meeting this week.

"For the CAD the focus this week on the BoC meeting on Wednesday. A positive set of economic data has boosted CAD and, in our view, the chances of a BoC hike in January...

We thus expect a fairly constructive tone from the BoC this week with any concern about NAFTA negotiations offset by domestic wage data. The market is till pricing in a less than 50% chance of a January hike which suggests scope for Canadian front-end yields to turn more supportive for the CAD," CACIB Research argues. 

In line with this view, CACIB Research remains short USD/CAD from 1.2770 targeting a move towards 1.2300, with a stop at 1.2925. 

For bank trade ideas, check out eFX Plus.