14 Apr 2014
BoC would remain on hold - TD Securities
FXStreet (Barcelona) - Shaun Osbourne, Chief FX Strategist at TD Securities, expects the BoC to leave its policy unchanged in its meeting.
Key Quotes
"There is a busy week in store for the CAD. The dearth of domestic data recently is replaced by a mini deluge—manufacturing sales, home sales, international securities transactions data and CPI all ahead of the long weekend—and on Wednesday, the BoC announces its latest monetary policy decision and releases the Monetary Policy Report update. Governor Poloz will also hold a press conference."
"We look for no change in policy this week, of course. Most interest will focus on how Governor Poloz interprets the recent economic data trends and, possibly, any reaction the governor has to the recent strengthening in the CAD."
"We think the basic thrust of the bank’s message will reiterate the neutral rate stance while continuing to stress the downside risks to the outlook, considering that inflation remains stuck at the lower end of the BoC;s target zone. The data simply do not warrant anything else and anyone looking for the BoC to edge back from the very dovish stance they have adopted in recent months will be disappointed. Governor Poloz may also be a little concerned that the recent rebound in the CAD has undermined the advantages a weaker exchange rate conferred on the export sector to some degree at least."
"Meanwhile, the BoC has nominated Carolyn Wilkins to the position of Senior Deputy Governor, to replace Tiff Macklem who will shortly be departing from the BoC. Wilkins was formerly an advisor to Governor Poloz."
"Back at the exchange rate specifically, the recent run higher in the CAD may be running out of gas. We had thought that downside risks extended to a 1.07 handle after the early April drop under 1.10, with the CAD perhaps peaking at some point in the next week or two time-wise. But the rebound in funds last week, leaving the USD to close more or less unchanged on the week, suggests that the USD may be finding its footings again."
"A definitive low has not—yet– formed but we think there should be good support near-term to the 1.0950 area zone and that gains through 1.1020/30 intraday will be a positive and add to recovery momentum to the upper 1.10s. A firmer close on the week for USDCAD—the higher, the better from a technical point of view—will suggest a low is in."
Key Quotes
"There is a busy week in store for the CAD. The dearth of domestic data recently is replaced by a mini deluge—manufacturing sales, home sales, international securities transactions data and CPI all ahead of the long weekend—and on Wednesday, the BoC announces its latest monetary policy decision and releases the Monetary Policy Report update. Governor Poloz will also hold a press conference."
"We look for no change in policy this week, of course. Most interest will focus on how Governor Poloz interprets the recent economic data trends and, possibly, any reaction the governor has to the recent strengthening in the CAD."
"We think the basic thrust of the bank’s message will reiterate the neutral rate stance while continuing to stress the downside risks to the outlook, considering that inflation remains stuck at the lower end of the BoC;s target zone. The data simply do not warrant anything else and anyone looking for the BoC to edge back from the very dovish stance they have adopted in recent months will be disappointed. Governor Poloz may also be a little concerned that the recent rebound in the CAD has undermined the advantages a weaker exchange rate conferred on the export sector to some degree at least."
"Meanwhile, the BoC has nominated Carolyn Wilkins to the position of Senior Deputy Governor, to replace Tiff Macklem who will shortly be departing from the BoC. Wilkins was formerly an advisor to Governor Poloz."
"Back at the exchange rate specifically, the recent run higher in the CAD may be running out of gas. We had thought that downside risks extended to a 1.07 handle after the early April drop under 1.10, with the CAD perhaps peaking at some point in the next week or two time-wise. But the rebound in funds last week, leaving the USD to close more or less unchanged on the week, suggests that the USD may be finding its footings again."
"A definitive low has not—yet– formed but we think there should be good support near-term to the 1.0950 area zone and that gains through 1.1020/30 intraday will be a positive and add to recovery momentum to the upper 1.10s. A firmer close on the week for USDCAD—the higher, the better from a technical point of view—will suggest a low is in."