CAD: Multi-month drag has eased - Westpac

In view of Richard Franulovich, Research Analyst at Westpac, a major multi-month drag on CAD has eased with the BoC adopting a more constructive tone on the economy.

Key Quotes

“The Bank has finally embraced the firmer tone to the data after long downplaying it, noting that the adjustment to the oil price decline is “largely complete” and that recent data have been “encouraging”. The Bank appears to have adjusted their assessment of spare capacity too, simply noting, “ongoing excess capacity” instead of “material excess capacity”. Tellingly, the Bank has also dropped the implicit open ended promise to maintain stimulus, the Bank now noting that the current degree of stimulus is appropriate “at present”.”

“With OPEC/non-OPEC redoubling efforts to address excess oil supply and the BoC pivoting in a hawkish direction CAD appears to have put in a major multi month low on multiple crosses. USD/CAD on course to test 1.32/1.33.”