BoC Preview: A turning point? – ING

By FXStreet According to Viraj Patel, Foreign Exchange Strategist at ING, at the next meeting on Wednesday 13, the Bank of Canada, tighter financial conditions will be a concern for Poloz while regarding USD/CAD risk are still skewed to the upside.

Key Quotes:

“This week’s meeting (13 Apr) may signal that policy has reached an inflection point with the turnaround in data to see the BoC endorse a neutral bias. But we suspect that it won’t take much for the downside risks to re-emerge. The strong reliance on export-led growth means that a weak CAD is crucial to the reflationary story. We wouldn’t be surprised to see the BoC follow the Fed this week and strike concern over the tightening of domestic financial conditions.”

“As for USD/CAD, the near-term risks are still skewed to the upside and we could see a move back to 1.32 should oil prices drift lower. Yet, we think the pair will trade within a tight 1.32-1.38 range over a 3-6M horizon – with both the BoC and Fed arguably content with this stability.”

“Even if the BoC were to remain neutral, we see two reasons for why the near-term risks to USD/CAD are skewed to the upside: (i) …read more

Source:: FX Street