The Bank of Canada (BoC) holds its next policy meeting on 1 March. We expect the BoC to leave its policy rate unchanged at this week’s meeting. We also believe that it will reiterate that risks on inflation remain roughly balanced. Nevertheless, the statement is likely to focus on the fact that uncertainty remains very high especially regarding US economic policy.
We remain positive on CAD and continue to believe that USD/CAD could end Q1 at around 1.28, supported by an increase in commodity prices, continued improvement in the Canadian economic outlook and the view that USD is unlikely to appreciate meaningfully.
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