CAD: More insurance from BoC? – Rabobank

By FXStreet FXStreet (Delhi) – Jane Foley, Research Analyst at Rabobank, suggests that the investors have drawn similarities between the economic backdrop this year and last and speculation of a rate cut at today’s policy meeting have spiked higher during the past couple of weeks.

Key Quotes

“Expectations for and against a BoC rate cut this afternoon are now fairly evenly balanced.

Almost irrespective of the policy decision that the Bank of Canada makes this afternoon, the current heightened levels of uncertainty about the direction of policy argues the case of a step up in the forward guidance offered by the Bank.

Since market speculation about the outcome of today’s policy meeting is split, there is risk that the announcement will have a heavy impact on the CAD. By expressing a very dovish bias the BoC could potentially limit CAD gains on any decision to leave rates on hold. Alternatively guidance could nip in the bud any speculation that a rate cut today could lead to further moves later in the year.

Although we see risk that several major central banks could extent their easing bias in the coming months, on balance, we expect the BoC to leave policy on hold. While it is clear that …read more

Source:: FX Street