TD Research notes that USD/CAD marked its biggest one-day move in nearly three months, dropping over 1% in reaction to BoC Wilkins comments yesterday which clearly caught markets off guard, as she cited several improving fronts regarding the Canadian economy.
“Most importantly she concluded her remarks asking whether the considerable monetary stimulus was still needed to achieve the Bank’s policy mandate. These comments dovetail with the recent shifts in the BoC’s tone. Indeed, her speech emphasized the sustainability of the recovery, which comes on the heels of the stellar May jobs report,” TD adds.
“Overall, this increases the upside risks to our BoC call, with increasing odds for a hike as early as October this year and break below 1.30 in Q4,” TD argues.
In line with this view, TD maintains a short USD/CAD position from 1.37 targeting a move to 1.32.
Source: TD Securities Research
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