USD/CAD breaks through 1.20 ahead of BoC meeting

•     USD/CAD breaks through 1.20 ahead of BoC meeting

–    Manufacturing sales disappoint, prices of oil, natural gas, lumber fall

–    Market is starting to price in a rate cut

–    Bank of Canada meeting today likely to keep rates unchanged, but could revise down its GDP and inflation forecasts, possibly discuss rate cut. CAD-negative.

•     Bank of Japan cuts its inflation forecast, admits defeat so far

–    It won’t make its target of 2% inflation by the coming FY starting in April, though it claims it will achieve it in the following FY (the market doesn’t believe this)

–    BoJ may have to do another round of easing – or maybe it will admit defeat, like the SNB, and let the market take control? Not likely in my view.

•     NZD falls as inflation falls

–    CPI -0.2% qoq in Q4

–    But prices rose at latest milk auction, 2^nd time in a row = better outlook than AUD

•     Today:

–    UK:  Minutes of BoE meeting – will Forbes join the dissenters? Also UK unemployment expected to fall, average earnings rise = GBP-positive

–    Canada: BoC expected to remain on hold; watch forecasts

–    US: housing starts & building permits