Bank of America Merrill Lynch sees a buying opportunity after the BOC meeting.
Bank of Americs Merrill Lynch expects the BoC to hold rates at their April meeting after months of hinting that the bar for a near-term move is high.
"The BoC will likely toe the party line that a factory recovery will offset the energy-sector drag later this year. Although the BoC could cut its 1Q GDP growth forecast to 0.5% from 1.5% in the MPR, they will likely boost growth in later quarters. That would keep the timing of the closing of the output gap unchanged, suggesting no reason to ease policy at the April meeting," BAML writes.
"Ultimately, we recommend fading USD/CAD weakness post-BoC. We do not see the BoC cutting rates until 4Q15, but risks remain on the downside to the economic outlook with the energy shock giving the FX market comfort in maintain its short CAD position. Additionally, the next leg higher in USD/CAD will be largely driven by US news/dataflow. Given the extreme winter, we expect data to turn up in coming weeks as data uninfluenced by bad weather are released," BAML writes.
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