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ING analysts are expecting the Bank of Canada  to reiterate its “accommodative” stance on monetary policy in the upcoming 10  July meeting, stressing a data-dependent approach.

Key Quotes

“The BoC should continue to highlight the downside risks stemming from trade tensions and slowing global economic activity. Nonetheless, the data flow since the May  meeting has been broadly positive, which tends to suggest a cautiously upbeat domestic economic assessment, while signalling little appetite for policy easing. This may be particularly true given the recent boom in inflation and wage growth which should prompt an upside revision in the CPI forecasts as the monetary policy report is published.”

“In the aftermath of the meeting, the USD/CAD reaction may be broadly muted,  as markets seem to have already priced in most of the positives for the loonie. We continue to expect policy rates to remain untouched over  the next 18 months and believe that CAD will  stay supported despite possibly facing kick-back from re-escalating trade tensions. Accordingly, we stick to our current USD/CAD forecasts at 1.30 for 4Q19 and 1.28 for 1Q20.”