BoC likely wary of recent CAD gains, USDCAD looking oversold – BNPP

Research Team at BNP Paribas, suggests that Canada’s Q4 GDP came in firmer than expected.

Key Quotes

“However we note that the data showed little sign of the long-awaited rebalancing away from commodity exports towards manufacturing, with domestic demand driving the expansion. We suspect that the recent strengthening of the CAD and reduced scope for Fed tightening will move the Bank of Canada in a more dovish direction than is currently reflected in rates, and we remain bullish USDCAD accordingly. Furthermore, BNP Paribas STEER™ signals USDCAD is oversold with short-term fair value well above 1.3500.”