CAD: Guided lower from dovish BoC - ING

A ‘dovish’ BoC statement – with the central bank taking a more cautious stance on future rate moves – explains CAD’s sharp post-meeting move lower, according to Viraj Patel, Foreign Exchange Strategist at ING.

Key Quotes

“Tailwinds still remain for the loonie – not least a NAFTA deal, which media reports suggest could be reached within 3 weeks. But a key take-away from yesterday’s BoC meeting was that the central bank will not adopt a ‘hike on NAFTA deal’ policy approach; Governor Poloz noted that investment or export data may need to recover for the BoC’s conviction over a near-term rate hike to pick up.”

“We don’t think the BoC was as ‘dovish’ as the initial CAD reaction suggests – noting the upward revision to Canada’s potential growth rate. $/CAD closing the week below its 200-DMA (1.2625) would be a bearish confirmation.”