USD/CAD: Rebound Or Further Downside At Current Levels? - BNPP

The Bank of Canada should remain in a wait-and-see mode on Wednesday despite risks to the growth outlook remaining to the downside, says BNP Paribas.

"The BoC has signalled that it expects fiscal stimulus to boost growth although with the trade-weighted CAD gaining by more than 8% since January the statement should be careful to avoid further CAD gains.

This leaves us biased to expect a USDCAD rebound rather than further downside from current levels, especially as our positioning indicator suggests CAD shorts have now been largely unwound. A tick up in the Canadian unemployment rate on Friday would support that view as well," BNPP argues.

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