USD/CAD higher on the day
USD/CAD traders have been asking the same question to BOC Governor Poloz: What do you mean?
That's after he talked yesterday about 'caution', something the BOC said it will take before removing stimulus and something he reiterated yesterday. But at the same time he said 'caution' didn't necessarily mean staying on the sidelines.
In the aftermath, the odds of a BOC March hike rose to 62.5%, they have since pared back to 58.5% with the market evidently deciding that it can't trust Poloz.
The bad news for CAD remains the oil market where Western Canada Select is trading at a $25 discount to WTI. That's down from $28 yesterday but is still a brutal gap.
Looking at the short-term chart, the level to watch is yesterday's bounce-back high of 1.2815. Look for a rebound to 1.2850 if it breaks.
For more on the loonie, here are some key calls from banks on the loonie next year.
