16 Jul 2014
USD/CAD: Bias is to be long into BoC - RBS
FXStreet (Bali) - According to RBS FX Strategists, the BoC is expected to retain its dovish stance later today at their monthly monetary policy decision, thus preferring to be short CAD going into the event.
Key Quotes
"The Bank of Canada holds its monetary policy decision for July on Wednesday. The release will include the post-decision statement and the latest Monetary Policy Report, which will include new forecasts for growth and inflation."
"The statement may acknowledge that downside risks to inflation have become less important amid higher inflation recently. While this change would be hawkish relative to their June communication, we feel the market has adequately priced in this change, particularly given above target inflation seen recently."
"While the Bank may acknowledge this recent strength in inflation, we think the Bank will largely look through the recent figures and retain its fairly cautious stance on the recovery overall."
"That dovish stance leaves our bias to be short of CAD going into Wed's decision, as market participants may be well prepared for the modest upgrade to the inflation language and positioning in CAD appears more neutral (less short)."
Key Quotes
"The Bank of Canada holds its monetary policy decision for July on Wednesday. The release will include the post-decision statement and the latest Monetary Policy Report, which will include new forecasts for growth and inflation."
"The statement may acknowledge that downside risks to inflation have become less important amid higher inflation recently. While this change would be hawkish relative to their June communication, we feel the market has adequately priced in this change, particularly given above target inflation seen recently."
"While the Bank may acknowledge this recent strength in inflation, we think the Bank will largely look through the recent figures and retain its fairly cautious stance on the recovery overall."
"That dovish stance leaves our bias to be short of CAD going into Wed's decision, as market participants may be well prepared for the modest upgrade to the inflation language and positioning in CAD appears more neutral (less short)."