Back
26 Feb 2015
Poloz to play a waiting game for rates, buy USD/CAD on dips – TDS
FXStreet (Barcelona) - The TD Securities Team asses the marcor, rates and FX outlook for Canada, suggesting to buy any USD/CAD dips as policy divergence will limit the USD drop.
Key Quotes
“Regional weakness in housing and across confidence measures signal the leading edge of the drag that lower oil prices will exert on the economy. However, positive growth offsets from manufacturing have proven potent.”
“Headline inflation to fall further, but core will remain more resilient.”
“The Bank of Canada's reaction function based on risk management suggests that the 25bps insurance cut was sufficient for now.”
“There is significant uncertainty around the next move from the BoC, but Poloz appears to be signalling a wait and see approach.”
“The front-end of the curve will maintain an easing bias, supporting a steeper curve in 2015Q2 (especially 2s5s). Canada-US spreads look fair around current levels as we expect to Fed to start tightening roughly a year ahead of the BoC.”
“A lot of bad news is priced into the CAD at current levels and seasonal factors suggest that the CAD may bounce modestly in the next few weeks.”
“Soft commodity prices and diverging central bank policy stances suggest little scope for a sustained USD drop, however. Look to buy USDCAD dips.”
Key Quotes
“Regional weakness in housing and across confidence measures signal the leading edge of the drag that lower oil prices will exert on the economy. However, positive growth offsets from manufacturing have proven potent.”
“Headline inflation to fall further, but core will remain more resilient.”
“The Bank of Canada's reaction function based on risk management suggests that the 25bps insurance cut was sufficient for now.”
“There is significant uncertainty around the next move from the BoC, but Poloz appears to be signalling a wait and see approach.”
“The front-end of the curve will maintain an easing bias, supporting a steeper curve in 2015Q2 (especially 2s5s). Canada-US spreads look fair around current levels as we expect to Fed to start tightening roughly a year ahead of the BoC.”
“A lot of bad news is priced into the CAD at current levels and seasonal factors suggest that the CAD may bounce modestly in the next few weeks.”
“Soft commodity prices and diverging central bank policy stances suggest little scope for a sustained USD drop, however. Look to buy USDCAD dips.”