The Canadian dollar is curiously weak today despite AUD strength and risk appetite
Citi flags a scope for further CAD gains vs the USD and on crosses.
"The Bank of Canada Business Outlook Survey showed optimism across businesses as the pandemic resides...The report provides yet another optimistic data point for the BoC supporting the case for the Bank ending its asset purchases by the end of the year (or early next year) and hiking rates by H2-2022," Citi notes.
"CitiFX Strategy expects recent developments in commodity prices, domestic labor market and now the Q3-2021 BOS to lead to a more hawkish October BoC meeting. Should BoC pull forward the closing of the output gap (currently H2 -2022) or taper QE purchases by more than the widely expected CAD1bn, further support for CAD against the USD and the crosses," Citi adds.
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