26 Mar 2015
Poloz might be less dovish than markets expectations – TDS
FXStreet (Barcelona) - The TD Securities Team believe that Poloz may sound neutral on the rate outlook than market expectations, which along with the rise in crude prices help USD/CAD to move lower towards 1.2350/60.
Key Quotes
“Beyond crude oil, Governor Poloz’s speech in London (9.30ET) is front and center for the CAD. Expectations of a dovish set of comments have probably grown in the past week.”
“And while the Governor will deliver a downbeat view on what has already been a poor data run (and what is likely to become worse soon), this is not new information given that Poloz has already acknowledged that he would view the drag from the oil shock as occurring sooner rather than "larger"."
“This has effectively bought some time to wait and see how his insurance cut plays out on the broader economy. Lower rates remain a strong possibility (and a 25bps cut is factored into the curve for Q3) but we doubt there will be an easing until the BoC has a fuller appreciation of what is going on in the economy—and that may not be clear until the middle of the year.”
“Poloz may sound more neutral on the rate outlook than the markets expect (recall Deputy Gov. Lane remarked last night that the impact of the January rate cut on financial conditions had been bigger than expected) and we think this will—along with the softer USD undertone and the bounce in crude—help USDCAD make a run for key support at 1.2350/60.”
Key Quotes
“Beyond crude oil, Governor Poloz’s speech in London (9.30ET) is front and center for the CAD. Expectations of a dovish set of comments have probably grown in the past week.”
“And while the Governor will deliver a downbeat view on what has already been a poor data run (and what is likely to become worse soon), this is not new information given that Poloz has already acknowledged that he would view the drag from the oil shock as occurring sooner rather than "larger"."
“This has effectively bought some time to wait and see how his insurance cut plays out on the broader economy. Lower rates remain a strong possibility (and a 25bps cut is factored into the curve for Q3) but we doubt there will be an easing until the BoC has a fuller appreciation of what is going on in the economy—and that may not be clear until the middle of the year.”
“Poloz may sound more neutral on the rate outlook than the markets expect (recall Deputy Gov. Lane remarked last night that the impact of the January rate cut on financial conditions had been bigger than expected) and we think this will—along with the softer USD undertone and the bounce in crude—help USDCAD make a run for key support at 1.2350/60.”