• They forecast European output to contract 1.5%
  • Spending cuts and European spillover will slow US economy
  • Inflation forecast to 2.2% this quarter vs 1.9% forecast in Oct
  • Q2 to 1.5% from 1.0%.

The OIS market is priced for no BOC rate hikes in 2012 but I expect an effort to price them in soon (CAD bullish). USD/CAD continuing to drift lower after the EUR/CAD-driven spike to 1.0175.