How to trade a Bank of Canada cut - BAML

Discussion in 'Fundamental Analysis' started by ForexLive, Jan 18, 2016.

  1. ForexLive

    ForexLive Forum Member

    Sep 2, 2015
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    The Bank of Canada decision is Wednesday: From Bank of America Merrill Lynch: Our out-of-consensus call for a 25bp Bank of Canada cut next week has very quickly become consensus. The market is now pricing a 50% chance of a cut this week (Chart 1), while fully pricing a cut by the March meeting. This is in sharp contrast to the period shortly after the BoC's December meeting when only 6bps of cuts were priced for the entire year. With less than full cut priced for next week's meeting, we would expect CAD to remain under pressure in a cut scenario despite its sharp move recently. In the January 2015 surprise cut, USD/CAD rose 2.3%, suggesting that we could still see over a 1% move with a 50% chance already priced in.

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