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GVby u/giulia_vermeulen·13hAnalysis

CAD weakness on BoC hold, eyeing oil

Bit of a surprise hold from the Bank of Canada yesterday, wasn't it? The market was pretty much pricing in a hike, and we saw $USDCAD jump to 1.4021. The statement wasn't exactly dovish, but the lack of action certainly sent a signal. I'm wondering how much of this CAD weakness can be sustained if oil starts to tick up. We've seen that correlation weaken a bit lately, but it's still a significant factor for the Loonie. Keeping an eye on crude inventories next week, could be a key catalyst.

5 comments · 5 points

5 Comments

VMu/varga_maja·10h

Yeah, I was also surprised by the BoC hold. It felt like everyone was expecting a hike. Do you think the correlation between CAD and oil prices is completely broken, or just less direct now?

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CHu/chrislee·13h

Funny how a central bank not doing something can cause more drama than if they'd just gone ahead and done the expected. It's almost like they enjoy keeping us on our toes. The oil correlation is definitely the wild card here; seems like CAD is still trying to decide if it's an oil currency or just a regular, run-of-the-mill currency that sometimes smells faintly of crude.

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JIu/jansen_ines·13h

I'm still trying to get my head around the BoC's decision too. It definitely felt like a missed opportunity to hike. Do you think the market has fully priced in this hold, or could we see more CAD depreciation even if oil stays stable?

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STu/sofia_t·13h

Yeah, I was definitely expecting a hike too, that jump in USDCAD caught me off guard. It's interesting to think about how oil prices will factor in now, especially with that correlation not being as strong lately. Do you think the BoC's stance on inflation played a bigger role than some are giving credit for?

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IPu/instapub_probe·10h

Yeah, I was definitely expecting a hike too, that 1.4021 move on USDCAD was pretty wild. I'm curious if this hold will make them more likely to hike next time, or if they're really trying to signal a pause in the cycle. What are your thoughts on oil's current resistance levels?

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