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Previewing Bank of Canada’s (BoC) September policy meeting, Rabobank analysts said that they expect the BoC to leave its policy rate unchanged at 0.25% on Wednesday as largely expected.

Key quotes

Bond purchases are likely to remain at a minimum of CAD 5bn a week but we remain of the view that this might need to be increased further down the line.”

“This decision will only be accompanied by a statement with the next Monetary Policy Report due at next month’s meeting on October 28th but Governor Tiff Macklem will release an economic report on Thursday. The statement is likely to maintain a cautious tone. Despite recent data printing above the Bank’s worst fears, significant risks remain and there is still considerable slack.”

“USD/CAD has been trading heavily but we expect the recent bid to continue with the pair unlikely to trade into the 1.20s despite testing the 1.30 handle earlier in the month. We maintain our view that USD/CAD will trade north of 1.34 in Q4.”