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Sep 07 - 09:55 AM

CAD: BoC To The Rescue? - Credit Agricole

By eFXdata  —  Sep 07 - 08:50 AM

Credit Agricole CIB Research discusses its expectations for today's BoC policy decision.  

"The BoC is set to return to a more ‘normal’ course of action at today’s % meeting after it raised rates by 100bp to 2.50% at its July meeting. The purposely evasive forward guidance, but persistent inflation, has led to the market nearly fully pricing in a 75bp rate hike today, despite weaker-than-expected growth and signs that the rate hikes so far have begun to slow the economy. Our economist also looks for a 75bp rate hike but sees the call as closer than the 95% probability given to it by the market," CACIB notes. 

"In any case, the BoC’s rate hiking cycle looks set to remain very much in tune with the Fed’s, which subsequently should offer USD/CAD no specific direction. Instead, the CAD has been trading more in line with oil prices as well as risk sentiment. The relative outperformance of Canada’s economic data by US economic data has also been supporting USD/CAD," CACIB adds.

Source:
Crédit Agricole Research/Market Commentary

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