USD/CAD deciding on next direction.
Yesterday BOC's Poloz gave markets some reason to be optimistic. Even if he didn't actually say much new, as Adam pointed out at the time, it seems the way that Poloz communicates does surprise the markets. Sometimes, he reveals his hand as a cardsman plays an ace up his sleeve. Like he did when he surprised markets with an interest rate rise in September 2017. Yet, at other times when the market was expecting some bullish tones from him, he maintained a dovish hold as he did at his last meeting.
So, Poloz is full of surprises. That is the takeaway. Sometimes he blows hot , other times cold. It seems that he is blowing hot again. If you read Greg's comments on what Poloz is saying from yesterday you can see the temperature gauge is rising. So, the general point is look to buy CAD until he switches to his next cycle. Of course, think about NAFTA and the CAD data releases which are all going to add to CAD 'temperature' one way or the other. This photo of Poloz below sums up a little of what I am saying here - one hand is up, the other hand is down. Will he be bullish or bearish? Which one does he come to work with next? He keeps the market guessing, but don't worry just go with the recent flow...
