BoC likely to have a closer look at the government's 2016 budget plan

The Bank of Canada (BoC) holds its next policy meeting on 9 March and is largely expected to hold rates unchanged at 0.5%. Comments from the BoC at the January meeting suggested that the BoC is expecting a fiscal boost from the March budget and would not change its policy prior to the budget's release.

The BoC is likely to have a closer look at the government's 2016 budget plan due to be released on 22 March. A budget which delivers significant fiscal stimulus to boost growth should be CAD-supportive and further reduces scope for BoC rate cuts.

"This re-pricing has been a main factor in CAD's outperformance and, while we remain long-term bears on the currency, we believe CAD should remain supported in the near term", says Morgan Stanley in a research note.