USD/CAD to hover around 1.27, EUR/CAD to test the 1.40 support – ING

FXStreet Insights Team FXStreet

The Bank of Canada (BoC) is set to hike rates by 25bp today. Although the move is fully priced in, the loonie could continue to perform relatively well, especially in the crosses, with external factors set to out-shadow post-BoC moves, economists at ING report.

BoC to hike by 25bp

“We expect to see a 25bp rate hike in Canada. The global re-pricing of tightening expectations has seen markets price out the possibility of a 50bp move today, although 25bp is fully embedded into CAD and should not be enough to send the loonie higher. The focus will be on forward-looking language and on the assessment of the impact from the Russia-Ukraine conflict on policy plans.”

“The spike in oil and gas prices is set to further underpin Canada’s economic momentum, while geographical distance and strong links to strong US domestic demand are likely insulating the country from any economic spillover from the Ukraine turmoil.”

“While some USD demand could keep USD/CAD around 1.2700 for now, EUR/CAD may soon test the 1.4000 support.”

See – BoC Preview: Forecasts from seven major banks, a 25bps hike with several more to come

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