Sees USD/CAD sliding on BOC hikes
The Bank of Canada decision next week will be a highlight for financial markets and especially for CAD traders. A hike is a near-certainty but how hawkish the central bank will be is an open question.
It's the first meeting since the new trade deal with the US and Mexico.
"The USMCA trade deal, while a necessary ingredient in our outlook for the Canadian economy, will do little to shift growth into higher gear," CIBC writes in a note today.
They note that the post-deal rally in the loonie has faded but that the BOC should aid a turnaround.
"An October BoC hike, following up on a Januarymove, could nudge dollar-Canada to 1.28 again, but as in the past, a sustained rally for the loonie doesn't appear to be in the cards," they write, forecasting USD/CAD finishes the year at 1.28.
After a January hike, they see the BOC going on an extended pause while the Fed continues to hike, leaving USD/CAD at 1.34 at the end of 2019.
