Analysts at BBH note that the Canadian dollar retains the soft tone seen yesterday after the Bank of Canada meeting, which they did not see as providing fresh news.
“Some suggested that the rally in the BA futures was a sign that the market was moving away from a January hike. Color us skeptical. We do not think the market expected a January hike even before the BOC meeting. And the BA futures are not a particularly useful guide. The cleaner read, the Overnight Index Swaps, showed a somewhat greater chance at 23% vs. 16% previously. We do not expect a hike until closer to the middle of 2018. The US dollar had frayed the lower end of its recent range (~CAD1.2660) earlier in the week and now it’s moving above CAD1.2800. The upper end of the range is seen near CAD1.2900-CAD1.2920.”