CAD: Scope for further downside with markets 50:50 over Dec BoC hike - ING

It’s a big day for the loonie with Aug GDP data and a parliamentary testimony by BoC Governor Poloz in focus, according to Viraj Patel, Research Analyst at ING.

Key Quotes

“Despite having fallen quite sharply in the past few weeks, we still think there is further room for CAD to move lower as markets fully price out scope for a Dec BoC rate hike (currently a 47% probability is priced in). Muted GDP growth (consensus is for 0.1% MoM) and further cautious policy talk from BoC officials may just be the catalysts for a dovish BoC repricing. While we have been calling for a retrace up to the OECD PPP fair value estimate of 1.27, there’s a chance $/CAD now overshoots this in the near-term – with 1.30 likely.”