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Analysts at TD Securities explained that the odds of a July rate hike by the Bank of Canada are now essentially a coin flip after sitting at nearly 80% in mid-June.  

Key Quotes:

“Lower rate expectations are due in part to an escalation in trade uncertainty and some disappointment on the data front. Despite this, our view for a July hike remains unchanged, consistent with incoming data and past BoC communications as detailed below.”

“However, we flag several factors that can derail a rate hike scenario, the first being Governor Poloz’s speech on 27 June. The second is further action on the trade front, and third is incoming data, notably April GDP.”

“We therefore outline what to watch in Poloz’s communications as well as on trade policy and incoming data. A return to cautious messaging is key to monitor while we see a higher bar for trade risks and a deterioration in business sentiment and economic data to derail rate hike expectations. Overall, we look for developments going forward to push July rate hike odds higher.”