Goldman Sachs say its time to look for upcoming policy divergence between central banks
GS see Norges Bank and the Bank of Canada as most likely to raise interest rates ahead first
- Norges likely hiking in Q4 2021
- BoC to begin tapering in April, and raise rates in the Q3 '23
- therefore look for short USD vs CAD and NOK
Interestingly the note emphasises that the largest response to divergent rate paths is in close neighbours
- eg. USD/CAD, NOK/SEK and AUD/NZD
- probably due to factors like cross-border currency hedging and fundamental domestic factors driving the rate differential
