CAD: Healthier background continues to develop - Westpac

In view of Richard Franulovich, Research Analyst at Westpac, healthier background for CAD continues to develop: local data remains persistently solid and hopes are firming for a quick conclusion to revived NAFTA talks (while Canada is not participating in the latest round of talks, they’re expected to join negotiations later this month).

Key Quotes

“Just two +25bp BoC hikes are priced through to April 2019 (covering six meetings of which three are MPR meetings) – very light - even for a Bank that continues to stress a gradual approach to hikes amid solid wage gains and with inflation close to target.”

“Downside risks near term loom larger: USD/CAD could see 1.28. If a NAFTA agreement can concluded in a few months and the BoC delivers two hikes before the year is out, USD/CAD can potentially trade deeper into the low1.20s into H2 2018.”