Canada: Robust economic conditions - Westpac

The BoC’s business outlook survey confirms robust conditions of Canadian markets despite global trade/NAFTA tensions, explains Richard Franulovich, Research Analyst at Westpac.

Key Quotes

“Continued solid jobs gains in March and upside surprises on the BoC’s Feb core inflation measures all nudge the odds of a BoC hike higher, and possibly as soon as next week. Yet markets appear to be notably underprepared – OIS pricing giving a very skinny 16% probability for a hike.”

“Market pricing for their subsequent 30 May meeting looks light too, at 40% probability. The most likely scenario is for the BoC to be on hold, though a hike would not surprise.”

“USD/CAD has now retraced almost 2/3 of the sharp Feb/Mar bounce. Near term momentum, supported by positive energy price trends, should see USD/CAD testing its Jan 2018 1.23 lows.”