BOC is skewing hawkish on rates and forex – BofA

Ahead of the Bank of Canada (BOC) monetary policy meeting, up for publishing at 15:00 GMT on Wednesday, the Bank of America (BofA) came out with the preview of the key event for USD/CAD prices.

The investment highlights the BOC’s optimism while also saying, “The Bank will have to acknowledge much better growth than it anticipated without pushing back on the recent fierce movement in rates.

BofA also expects that such an act will be a difficult balance to strike and thus the risk is the BOC sounds "too constructive".

It’s worth mentioning that the US bank forecasts a 1.25 level for the USD/CAD (year-end 2021 target).

However, the preview also cited downside risks to the second half of 2021 prediction of 1.2900 while saying, "largely a reflection of broad USD strength driven by US economic decoupling, the result of extremely strong fiscal stimulus."

Read: USD/CAD picks up bids around mid-1.2600s with eyes on BOC, US stimulus