Westpac looking for the Australian dollar lower against the Canadian dollar in 2018

WPAC citing divergent monetary policy and diverging macro economic influences:

"Near term, the BoC should continue to bide its time, though an underlying firm growth picture should prompt the BoC to hike rates by mid-2018 and again later in H2 18. The RBA should remain on hold and with China's growth expected to slow through 2018, AUD should grind lower."

AUD/CAD should consolidate around 1.01-1.02 in Q2

  • then head clearly lower in H2 18

The AUD's 2-year yield premium over CAD has been almost completely eliminated

  • markets bracing for more BoC hikes this year versus a steady RBA