A reluctant risk rebound – TDS
Ned Rumpeltin, European Head of FX Strategy at TD Securities (TDS), offered his take on a modest rebound in the global risk sentiment on Wednesday, along with a brief preview on the upcoming release of Canadian consumer inflation figures and the BoC policy decision.
“Investor sentiment continues to stabilize after China announced measures to contain the spread of the coronavirus outbreak. We continue think it is premature to sound the "all clear" here, however, and think markets will not be able to assess the full scope of the situation for several weeks.”
“Looking ahead to today, today's BoC policy decision is our main focus while the December CPI data also features. We are looking for some moderate downside risks to both headline and core price measures. Elsewhere, the US calendar is fairly quiet as Davos and the impeachment proceedings provide distractions.”
“We look for the BoC to remain on hold at 1.75%, but for a cautiously optimistic stance to emerge. Amid an improved global growth outlook, this could give the communiqué a somewhat hawkish tinge. Despite this, we think downside risks in USDCAD will prove limited. Instead, we remain long the pair in our model portfolio.”