Search ForexCrunch

The market appears well-prepared for a hike by the Bank of Canada on Wednesday and a 25bp hike to 1.5% is 90% priced-in, according to Greg Gibbs, Analyst at Amplifying Global FX Capital.

Key Quotes

“This would be the fourth hike in the current cycle that began exactly a year ago in July last year.”

“But over that period the pace of hikes has slowed from two in successive policy meetings in Jul/Sep last year, then a wait of three policy meetings (four months) for a third hike in January.   A hike this week would be a wait of four policy meetings (six months).”

“While the market has largely concluded that the Bank will hike this week, it is also assuming that the bank is now on a very slow pace of tightening; not pricing in the next hike until early next year (at least another six months).”

“As such, there is still scope for the market to react to the policy statement this week; including the quarterly Monetary Policy Report and press conference.”