Goldman Sachs on the Bank of Canada policy meeting this week & the CAD
A snippet from Goldman Sachs preview of the Bank of Canada meeting (Wednesday, July 14)
(this via eFX, for bank trade ideas, check out eFX Plus)
- While tapering seems widely expected this week, the tone from the meeting or inflation forecast revisions in the MPR could result in some reaction from CAD
- Regarding comments on the currency, however, we think the Bank's concerns about a stronger CAD versus USD due to policy divergence have probably eroded somewhat: when the Fed brought forward its tightening timeline at the last FOMC meeting, the main catalyst for the BoC's concerns about the exchange rate (i.e. the Fed remaining on hold while the BoC continued to tighten) was diminished, and the level of USD/CAD rose
The BoC will accompany its policy statement with the latest Monetary Policy Report.