Make or break week for CAD; worst-case could see USD/CAD at 1.38 – ING

Research Team at ING, notes that two sources of risk for CAD this week are the: (1) oil price volatility stemming from the OPEC meeting and (2) domestic data including the 3Q16 GDP release (Wed) and Nov jobs report (Fri).

Key Quotes

“Governor Poloz's revelation that further easing was discussed at the last meeting means that there will be particular attention on the latest growth figures; any outcome below +3.0% QoQ is likely to be seen as a disappointment and will result in heightened calls for a BoC rate cut. Expect to see a lot of noise around prospective OPEC production cuts: major oil producers (incl. non-OPEC) were due to hold informal talks today, but this was cancelled; the main challenge is to resolve internal disagreements amongst OPEC nations (namely the big three – Saudi Arabia, Iraq and Iran) on how output cuts will be distributed. In the worst-case scenario (inadequate OPEC deal, weak Canadian growth data and strong US data), we could see USD/CAD move up to 1.3800.”