CAD: CPI a big test of BoC tightening expectations - ING

The CAD rally looks to be running out of steam in the face of more realistic BoC tightening expectations and range-bound oil prices, according to analysts at ING.

Key Quotes

“The narrowing of 2-year US-Canadian rates has been extreme and we think a 2H17 recovery in the US economy - coupled with softer macro data in Canada - should see a partial reversal. This points to upward pressure in USD/CAD towards 1.30.”

“CPI data (Fri) will be a big test of the market's expectation for another BoC hike in 2017. A negative core surprise will see CAD unwind further.”