Key Points:
Expected Rate Cut:
Messaging Crucial for CAD:
Focus will shift to how the BoC signals the pace of future rate cuts.Risks include near-term CAD strength if the BoC hesitates to commit to continued cuts.Tariff Uncertainty Weighs on Outlook:
Tariff threats from the US create an overhang, influencing the BoC's cautious tone.Medium-Term USD/CAD View:
Goldman remains comfortable with below-consensus estimates for Canada’s neutral rate.Long USD/CAD is a preferred medium-term strategy, reflecting potential headwinds from tariffs.Conclusion:
Goldman Sachs sees potential for near-term CAD support if the BoC sounds hesitant about further cuts. However, their medium-term view remains firmly tilted toward USD/CAD upside, driven by tariff risks and a relatively dovish BoC outlook. Long USD/CAD remains a favored trade.
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This article was written by Adam Button at www.forexlive.com. Read More Details
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