According to BBH FOREX analysts, the downturn in CAD/NOK is supported by the Bank of Canada's more dovish policy stance in comparison to the Norges Bank.
Further decreases are possible due to labor slack and weaker inflation.
After being on hold since April, the Bank of Canada (BOC) lowered the policy rate yesterday by 25 basis points to 2.50%, as was generally anticipated. Since Canada's labor market has further deteriorated, upward pressures on underlying inflation have subsided, and there is less upside risk to future inflation, the BOC stated that "there was obvious consensus to cut our policy rate."
That implies that if Canada's labor market continues to deteriorate, further easing is imminent. By year-end, the swaps market is pricing in 80% of a further 25 basis points fall to 2.25%, and there are some odds of another 25 basis points cut to a low of 2.00% during the next 12 months.
Further decreases are possible due to labor slack and weaker inflation.
After being on hold since April, the Bank of Canada (BOC) lowered the policy rate yesterday by 25 basis points to 2.50%, as was generally anticipated. Since Canada's labor market has further deteriorated, upward pressures on underlying inflation have subsided, and there is less upside risk to future inflation, the BOC stated that "there was obvious consensus to cut our policy rate."
That implies that if Canada's labor market continues to deteriorate, further easing is imminent. By year-end, the swaps market is pricing in 80% of a further 25 basis points fall to 2.25%, and there are some odds of another 25 basis points cut to a low of 2.00% during the next 12 months.
