FX Action: USD-CAD dove to a six-day low yesterday
FX Action: USD-CAD dove to a six-day low yesterday at 1.3335. The low was seem amid a 2%-plus surge in oil prices on news that the U.S. will in May end all waivers allowing countries to buy Iranian oil without facing U.S. sanctions. Front-month WTI prices earlier hit a fresh six-month high at $66.17. Oil prices are up nearly 45% on the year-to-date, which is a boon to Canada's terms of trade given the importance of oil exports. Analysts take a bearish view of USD-CAD on the assumption that oil prices will remain underpinned and the recent return-to-optimism growth picture in major global economies also holds up. The BoC's policy meeting and Monetary Policy Review on Wednesday highlights this week's domestic calendar in Canada. A steady 1.75% policy setting is widely anticipated. As for the growth and inflation outlook, a repeat of the cautious optimism that has prevailed so far this year is expected. Recent economic data has been consistent with the BoC's view that the expansion will resume in the second half of the year after the current "detour" has passed. The recent flow of data has, in our view, eliminated the previously slim chance of a rate cut this year. Our projection remains for a rate hike late in 2020.