Canada: Further cuts seem likely – Westpac

USD/CAD is set to jump in the opinion of analysts a Westpac Institutional Bank who are expecting further rates cuts from the Bank of Canada (BoC). USD/CAD is trading at 1.340. 

Key quotes

“USD/CAD has further room to run higher as global growth downgrades continue apace and given ongoing skittish market, though key resistance levels around 1.35-1.36 may slow the pace near term, as will the prospect of more Fed cuts.”

“The BoC delivered a strikingly downbeat near term assessment, the Bank citing lower commodity prices and a laundry list of domestic factors unrelated to COVID-19. Further cuts seem very likely.”

“Markets are pricing in a 60% probability of an immediate BoC follow up at their next meeting on 15 April and a total of 40bp in easing over the course of 2020. If the global COVID-19 case count does not meaningfully stabilise in the next couple months and markets remain skittish the BoC is very likely to cut again at their next meeting.”

“Trudeau’s government budget is due in coming weeks. Pressure is mounting for stepped-up fiscal measures to contain the COVID-19 fallout.”