BoC Governor Poloz was cagey this week about BoC hike prospects at their July 11 meeting as a month ago markets confidently priced in a 90%+ probability, but it has since fallen to 55%, points out Richard Franulovich, Head of FX Strategy at Westpac.
Key Quotes
“Poloz noted financial markets, “understood our message”, a nod to market pricing, but against that, the Bank is, “particularly data-dependent right now” (recent data has been weaker than expected). He added the Bank was incorporating recent steel and aluminum tariff announcements into their projections and surely the significant escalation in trade risks must figure as a heightened downside risk scenario going forward.”
“There is still significant data ahead of the meeting, Apr GDP, BoC outlook survey and June employment, but right now the prudent call is for a “hawkish hold”.”
“The backdrop for CAD is increasingly challenged, with trade uncertainty growing on multiple fronts. If trade tensions continue to intensify and the BoC takes a pass USD/CAD will continue to push higher.”
Share
