CAD: All key underlying positives still in place - Westpac

Richard Franulovich, Research Analyst at Westpac, suggests that viewing recent CAD weakness as a purely corrective affair, with all the key underlying positives still in place.

Key Quotes

“Markets continue to heavily favour an Oct 25 BoC follow up hike (80% priced) vs Sep 6 (28% priced), markets concluding that fresh MPR projections at their Oct meeting make that a more suitable date. But why wait? BoC officials have gone out of their way to make their intentions abundantly clear - insurance easings of 2015 have overstayed their welcome – and the data since their 12 July hike their has continued portray resilience.”

“With oil prices largely steady in recent sessions and markets underpricing Sep 6 BoC hike odds CAD weakness looks unwarranted, especially vs the likes of EUR and AUD. Admittedly leading growth indicators are cresting but that is not a trade for today.”