Can the BoC use the CAD as a direct policy tool?
The Bank of Canada is expected on Wednesday to join the growing list of minor G10 central banks in anchoring expansionary policy guidance. Unable to leverage off any US improvement, recent data has been unequivocally dovish and justified their December warnings over ‘greater’ downside risks to inflation. The BoC has options, not least a move towards the zero-bound. However, there is also value in waiting to see whether the material loss in CAD in recent week has already done the job.
Read the full report: UBS