Barclays Capital FX Strategy Research discusses USD/CAD outlook into the coming year, and thinks that the BoC won't likely be able to deliver a hike early in 2018 as currently priced-in by the market.

"Modest core inflation and NAFTA risks remain and the BoC statement confirmed its cautious approach to policy normalization. The market is pricing a little more than two hikes over a one-year horizon, adding downside risk to the CAD in case of disappointment, although the expected timing of the next hike has shifted toward March from January, more in line with our view," Barclays argues.

For the key drivers this week, Barclays thinks that CAD is likely to be guided by the tone of the FOMC statement and its projections, progress on the US tax cuts plan, and headlines about NAFTA renegotiation.

Source: Barclays ResearchOriginal Article