BoC to Stay the Course - BNPP
Research Team at BNP Paribas, suggests that for today’s Bank of Canada
announcement the focus will be on the updated macroeconomic projections
incorporating additional fiscal spending.
“The government expects the budget to boost 2016 GDP growth by 0.5pp and we do not expect the BoC’s estimates to be much different. Against this, the BoC forecasts will need to weigh an 11% strengthening in the tradeweighted exchange rate since the January MPR and weaker growth in US and global economy.
Ultimately the BoC may prefer to change little in its communication leaving the CAD react to the latest oil price developments. On that front, our commodity strategists are not convinced that even a positive outcome to the Doha oil producer talks will boost oil prices since a production freeze would not solve the problem of oversupply.
We expect WTI to slip to $36/bbl in Q2 and with US rates unlikely to fall much further, we believe risk-reward is skewed in favour of a USDCAD rebound back above 1.30.”