USD/CAD to move downward to 1.2365 if BoC starts tapering – BMO

The Bank of Canada meeting ends with a decision on Wednesday at 14:00 GMT. There are certainly some arguments for tapering but economists at BBH are not totally convinced. Here you can find where the USD/CAD pair may move after the BoC’s Interest Rate Decision and Monetary Policy Report.

Where could the Canadian dollar go near-term?

“If the BoC delivers tapering, we would expect USD/CAD to fall and perhaps test the March 18 low near 1.2365.”  

“If it does not taper, then we would expect USD/CAD to rise and perhaps test the March 5 high near 1.2735.” 

“Longer-term, CAD direction will be driven in large part by broader USD movements. We remain bullish on USD due to the economic outperformance of the US, but the recent slump in US yields has weighed on the greenback.”