Credit Agricole CIB Research previews the June BoC meeting on Wednesday.

"The BoC is unlikely to make any major changes when it meets on Wednesday. The policy rate is expected to stay at 2.25% and the bank looks poised to just stick to its noncommittal stance, especially as the next Monetary Policy Report will not be published until July. There should not be any specific pushback to tightening prospects which have actually been tamed significantly since the April meeting, with just about one rate hike priced-in now by the end of the year," CACIB notes.

"Ultimately, in contrast to earlier in the year, the sizeable widening in USD-CAD rate differentials since the start of May could explain most of the rally in USD/CAD over that period. Yet, our Fed-BoC policy outlooks do not necessarily foresee more divergence from here, which could help USD/CAD to stabilise in the upper end of its 1.35/1.40 range going into the summer. That would be in line with our long-held forecast of 1.39 for mid-year, although admittedly we had initially flagged potential threats around the USMCA review as the main reason to keep the pair there, whereas so far the process has not proved overly confrontational," CACIB adds.