Changes to the BOC forecast

  • 2020 -5.5% vs -5.7% in Oct
  • 2021 +4.0% vs +4.2% in Oct
  • 2022 +4.8% vs +3.7% in Oct
  • 2023 +2.5% (there was no forecast for 2023 in Oct)

That's a small shift better last year and a big shift higher in 2022. If that comes to fruition, the BOC is going to be hiking in 2022. They see inflation at 2.1% in 2023 in the first forecast for that year. The forecast sees much higher consumption and government spending in 2022 than previously.

USD/CAD chart

The BOC decision has hit at the same time as a broader jump in sentiment. US equities are soaring to a record and that's lent a broad bid to commodity currencies.

With that and the BOC decision, USD/CAD is flirting with the January 14 low, which was also a multi-year low. Watch for more stops on a break, this looks like it could be the start of a big move, but you have to be wary of a surprise from Poloz, which could undermine the move.