The Bank of Canada will hold its monetary policy meeting next week. Analysts at TD Securities expect a rate hike of 25 basis points, in line with the market consensus. They draw attention to Canadian dollar (CAD) may not receive too much directional bias from the appointment.
“We expect the BoC to hike 25 basis points in January and expect this to be the last hike in the cycle (although the forward-looking component does not rule out future hikes.”
“While this is expected to be the last hike, the CAD may not have much directional bias from this meeting as the curve may continue to be biased in looking at the other side of this interest rate cycle. This means that CAD may be more sensitive to any dovetail elements if the BOC emphasizes elements from the BOS. We see differentiated dynamics that play out on crosses with respect to risk correlations.”