23 October 2013 04:40 GMT Canadian Dollar Shows Few Assumptions for BoC Decision While the rate forecasts for Australian and New Zealand are getting significant attention in FX circles, the once ambitious discussion of a Bank of Canada rate hike to lead the majors has fallen to the wayside. Swaps curves show little of the hawkishness assigned to the higher-yielding majors and the market-based rate spreads that the Canadian dollar was closing quickly have significantly reversed course over the past four months. Abandoned fundamental causes can be reason for a currency to drift, but they can also be a source of substantial surprise. For a currency or market that is heavily pricing in a tightening regime, there is little room for surprise on follow through. Yet, if there is no expectation of such a move, there is a more substantial adjustment in positioning that needs to be done. So, while the expectations for the upcoming BoC decision are low, it is important to have a plan should the market be caught off guard.
Posted on: Wed, 23 Oct 2013 05:45:01 +0000
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