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- USD/CAD: BoC pause makes the Loonie more vulnerable to USD appreciation – ING
USD/CAD: BoC pause makes the Loonie more vulnerable to USD appreciation – ING
Economists at ING expect the Bank of Canada (BoC) to stay put today, but no rates pushback. All in all, the Loonie is unlikely to see sustained gains following the central bank decision.
BoC to hold, but should leave door open for hikes
“The BoC announces monetary policy today, and is widely expected to keep rates unchanged.”
“Some cooling off in the jobs market will likely be required to make the BoC relaxed with some re-easing of financial conditions, and for now, it’s likely that Governor Tiff Macklem wants to keep the door open for more tightening if needed, also because inflation remains significantly above target.”
“More rate hikes in Canada will hardly be priced in without clear hints of a resumption of the tightening cycle. This means that CAD may see – if anything – only some short-lived benefits from the BoC announcement today, since the BoC pause makes the Loonie more vulnerable to USD appreciation compared to other currencies that can count on hawkish central banks.”
See – BoC Preview: Forecasts from seven major banks, leaving rates on hold
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