Canada: Two additional 25bps cuts expected – TDS

The Governor of the Bank of Canada (BoC) Poloz will deliver an economic progress report at 17:45 GMT to give added context to deliberations that lead to a 50bp rate cut, economists at TD Securities inform. USD/CAD failed to attract upside momentum despite the rate cut.

Key quotes

“The market is nearly 100% priced for two additional 25bps cuts by September.”

“We think USD/CAD is unlikely to mark new ground as spot remains heavy and continues to hover well below the recent highs of 1.3465.”

“Our expectations for another Fed cut at the March meeting should work to keep USD/CAD anchored. Plus, CAD screens cheap to HFFV while positioning sits at a modest short. This may also limit the upside potential of USD/CAD.”