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Credit Agricole: CAD boosted by BoC release - eFXnews

FXStreet (Łódź) - The eFXnews team note that Credit Agricole points out that yesterday's BoC monetary policy statement including changes to guidance and forecasts lifted the CAD.

Key quotes

"First, on guidance, it dropped the term 'neutral' in regards to the next change in its policy rate. This compares to the September statement where it indicated that 'the Bank remains neutral with respect to the next change to the policy rate'.”

"The BoC remains firmly on hold but this language change and the BoC’s renewed focus on household imbalances help push front rates higher."

"Second, the forecast updates also helped marginally boost CAD. Indeed, on inflation, it increased its core inflation forecasts in the monetary policy report (MPR)."

"Specifically, it marked up its Q1 and Q2 2015 views to 1.9% YoY and 1.8% YoY from around 1.6% YoY in the prior MPR. Against a backdrop of disinflation and stagnation concerns across most of the globe, an uptick in the inflation outlook support FX."

"Indeed, while the BoC has been able to downplay the upbeat CPI figures over the recent months, it finally accepted that some of the price pressures might be 'sticky'.”

"We still expect the BoC to lag the Fed in the rate cycle due to the divergent business cycles. This is key our to our medium-term USD/CAD outlook."

"However, we like CAD on the crosses and think the US economic performance should help support the medium-term Canada macro outlook, supportive of CAD in the G10."

'This content has been provided under specific arrangement with eFXnews.'

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