TD Research discusses AUD and CAD outlook into this week's RBA and BoC policy meetings.
"For the RBA, we think that much of the damage has been done - at least in regards to AUD. The market is pricing in cuts over the coming year and yet we don't expect any new innovations from the RBA. In turn, we think no news is good news for AUD, reinforcing the low end of the range near 0.71. We believe the recent shift in RBA rhetoric is lagging rather than a leading indicator that should reinforce the support of external drivers," TD argues.
"We don't think one report is going to derail the BoC message of patience. The economy is decelerating and yet the real policy is negative that highlights how loose policy remains. The softer growth numbers offer a risk to the scope for future rate hikes but we think Poloz keeps the guidance unchanged this week. That could reinforce the recent ranges, leaving us to fade another run towards 1.34," TD adds.