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Analysts at Rabobank explained that they expect the Bank of Canada to raise rates 25bp to 1.50% on Wednesday, 11th July.

Key Quotes:

“The CAD OIS curve implies around an 85% chance of a 25bp hike.”

“17 of the 22 analysts surveyed by Bloomberg (including ourselves) expect a 25bp hike.”

“We think this will be categorised as a ‘dovish’ hike with the Monetary Policy Report and press conference likely to signal concerns over the impact of trade tariffs going forward.”

“We maintain the view that growth in Canada has peaked and that private consumption will slow going forward as households are squeezed by rising cost-push forces and higher debt servicing costs. The outlook for investment is weak given developments south of the border.”

“USD/CAD may drift lower into the meeting with 1.30 offering support but we favour a move higher in the pair in the aftermath of Wednesday’s meeting and expect the 1.32-1.34 range to dominate price action for the rest of the year.”