Richard Franulovich, Research Analyst at Westpac, suggests that the Bank of Canada meets this week and the sharp fall in energy prices and very limp data so far in Q4, pointing to ongoing recessionary conditions, should see the BoC cut their main policy rate 25bp to 0.25%.
Markets are not well prepared, pricing in only a 32% chance of a rate cut. A BoC rate next week should see USD/CAD build on already hefty gains, a run at 1.45 on the cards. That said, talk of 1.50 and even 1.60 in 2016 suggests that this burst of USD/CAD strength is very well owned and nearing its denouement.
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