Daily outlook for EUR/CAD: Societe Generale

Quotes from Societe Generale Cross Asset Research:

-Today's data is also forecast to show that inflation slowed further in Canada in January, to 0.8% yoy from 1.5%, but the probability of a second rate cut in March was downplayed by Canada's central bank governor Poloz earlier in the week.

-Low inflation and the threat to financial stability from zero interest rate monetary policies was the subject of a talk by Governor Poloz and has rekindled discussions on whether a narrow central bank mandate of inflation targeting has not passed its "sell by" date given that the possible costs of zero rates (leveraging up, asset bubbles) do not outweigh the benefits.

-The BoC is committed to inflation targeting but cautioned that the lessons of the past must be taken into account. The lower probability of a rate cut to 0.50% in March should keep the EUR/CAD on course for a third gain in four weeks and a decline towards 1.3800.