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- USD/CAD: 25bp rate hike by the BoC to put pressure on the loonie – Commerzbank
USD/CAD: 25bp rate hike by the BoC to put pressure on the loonie – Commerzbank
The Bank of Canada (BoC) will announce its rate decision later at 14:00 GMT. A 50 bps rate hike is on the table. As a lot seems to have been priced in already the reaction of the CAD exchange rates is likely to be limited if the BoC delivers as expected, economists at Commerzbank report.
Will the BoC deliver a step of 50bp?
“Like the majority of analysts, we expect a large rate step of 50bp to then 1% for the BoC’s rate decision today. A step of this nature has been largely priced in by the market.”
“A statement that is seen to be hawkish and that signals further large rate steps might provide short-term support for the loonie, in particular against the euro.”
“The loonie is likely to struggle against USD as the market is always keeping an eye on the US central bank, as it had sounded rather hawkish recently.”
“If the BoC were to hike its key rate by only 25bp today, contrary to expectations, this is likely to disappoint the market thus putting notable pressure on the loonie at least short-term, with a hawkish statement dampening the losses.”
See – BoC Preview: Forecasts from 10 major banks, hard to argue against a 50 bp hike
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