Wilkins talked about a lower neutral policy rate (no real surprise there) and also said Canada may need loose policy even at full capacity.
She just added that Canadian inflation is consistent with BOC forecasts (even though the latest numbers were higher than the consensus) so that’s another reason to buy USD/CAD.
The volatility in the pair lately has frustrated direction traders. Just when it looks like it’s breaking out, it reverses.
With the China worries today and the dovish comments I like the upside. At the moment it’s one of those trades where everyone is weary and that’s usually when the longer-lasting moves starts because no one believes it at first.
As an aside, this is one of the rare times when a BOC deputy has actually talked about monetary policy. I don’t know if that says something about what the BOC thought about Macklem/Jenkins or if they’re trying to communicate more. They could also be more actively grooming Wilkins to take over from Poloz one day.
