Created
: 2024.09.04
2024.09.04 18:45
The Bank of Canada (BoC) is widely expected to cut rates for a third consecutive meeting today. As discussed in our BoC preview, we think the policy rate will be trimmed from 4.50% to 4.25%, in line with the consensus and market pricing. The Bank won't release a new set of economic forecasts at this meeting, so all of the market's attention will be on the forward-looking language used in the statement and press conference, ING's FX strategist Francesco Pesole notes.
"At the BoC cut in July, Governor Tiff Macklem was generally dovish on the rate outlook, stressing a greater focus on growth over inflation, and signalling there would be more cuts ahead. Since then, Canada had a soft employment read (-3k in July), cooler wage growth, and crucially another slowdown in all key inflation measures, both headline and core. All those measures now range between 2.4% and 2.7%, so well within the BoC's 1-3% target range."
"We expect Macklem to reiterate it is "reasonable" to expect more easing by year-end, effectively endorsing market pricing for rates to be taken to 3.75% by year-end - i.e. another two 25bp cuts after September. Our view is that the BoC is on a relatively predictable track to gradually ease policy to reach the 3.0% mark by mid-2025. That is also broadly in line with market pricing."
"We doubt there will be huge implications for CAD from the BoC decision today. The risks are quite balanced given market pricing, and USD/CAD continues to be more responsive to US developments. We could see much more USD/CAD volatility on Friday when both US and Canadian jobs figures are released. For now, we continue to see USD/CAD as a 1.35-1.36 story in the near term, with risks slightly tilted to the upside as the external environment may not turn much more favourable for high-beta currencies like the loonie."
Created
: 2024.09.04
Last updated
: 2024.09.04
FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.
We hope you find this article useful. Any comments or suggestions will be greatly appreciated.
We are also looking for writers with extensive experience in forex and crypto to join us.
please contact us at [email protected].
Disclaimer:
All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.
The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.
Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy