UBS Morning Adviser

In the absence of key US data prints, some in the market may want to look up north for clues on overall demand south of the border. After all, around three-quarters of exports from Canada heads in that direction and the CAD has often been considered a ‘high-beta’ play on the US. Although the bilateral relationship remains strong and the Poloz-led BoC wishes to see exports continue to drive Canada’s recovery, there has been an active push for the country to diversify the composition and destination of such goods, simply to reduce the volatility of export growth and establish a more independent economic cycle – also one which is not excessively dependent on investment growth. As such, Friday’s print in Canada should say far more about domestic conditions than anything else.