BoC can count on the Fed

The Bank of Canada (BoC) rate decision is likely to be unspectacular today. The analysts polled by Bloomberg agree that the BoC will leave its key rate at 0.75%. Central bank governor Stephen Poloz had only recently confirmed the generally more optimistic BoC outlook. The lower oil price was putting less pressure on the economy than had been feared a while ago. Due to the recent recovery of the oil price, the continued strength of the US economy and the weak CAD the BoC now has good reason to take an optimistic view. 

In particular as it does not even have to do much to achieve it. There is nothing it can do to significantly affect the oil price or the US economy, and it does not even have to actively weaken CAD at present. The Fed is doing that for it by signalling a normalisation of its own monetary policy.

 "The general USD strength will continue to support USD-CAD during the course of the year. That means the BoC can sit back and relax" says Commerzbank.