BoC Preview: Things might end badly for CAD – Commerzbank

Today, we will get the Bank of Canada’s latest policy decision. Economists at Commerzbank analyze how could CAD react to the Monetary Policy Report. 

The market is uncertain about what comes next

The market is not entirely certain that there will be a further rate step today, even if the majority is pricing it in, including us. If the BoC hikes today, the CAD is likely to appreciate somewhat.

However, the market is uncertain about what comes next. It is therefore likely to hope for clear signals on the part of the BoC. If the Boc should remain vague and only repeat its commitment to price stability (which should be self-understood anyway) while the inflation data for June, due for publication on Tuesday, surprises to the upside, things might end badly for CAD.

See – BoC Preview: Forecasts from eight major banks, enough evidence to pull the trigger on another 25 bps rate hike