A look at a commodity cross
There's plenty of talk about undervaluation in AUD today given the bounce in iron ore prices. TD Research discusses that pair and expectations for this week's BoC policy meeting.
"The June BoC Announcement should be a relatively quiet affair. Despite a weaker than expected Q1, look for the Bank to argue that the outlook is unfolding roughly in-line with their April forecast. We expect the forward-looking passage to signal 2022H2 rate hikes, and we do not expect any change in QE at this meeting," TD notes.
"We think the risks skew negative into this week's BoC meeting. We think AUDCAD has started to bottom out and it remains one of the best expressions of G10 central bank mispricing and possible convergence," TD adds.
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