USD/CAD: Loonie to remain well-supported unless BoC places any doubt on market pricing – MUFG

Today we will have the policy announcement from the Bank of Canada (BoC). The Canadian dollar remains the standout currency in G10 after the US dollar. Economists at MUFG Bank expect the loonie to remain supported following the decision.

BoC set to go by 75bps 

“We suspect the BoC will hike by 75 bps and while a little more than that is priced we would expect the statement along with the guidance in the Monetary Policy Report to be enough to keep CAD supported.”

“As long as the BoC does not question current market pricing (unlikely) then CAD should remain well supported. We say ‘well supported’ because it is difficult to be bullish on any non-US dollar currency at present but we equally do not see reason for today’s BoC outcome to be a reason for fuelling accelerated CAD selling.”

See: BoC Preview: Forecasts from nine major banks, hiking interest rates aggressively