CAD: Don't rule out a BoC cut today - ING

Today's Bank of Canada meeting has been a very hard one to call, ING's commodity experts Ewa Manthey and Warren Patterson note.

A hold may well be accompanied by dovish language

"Consensus was slightly favouring a 25bp cut before aligning with market pricing for a hold over the past couple of days. The CAD OIS curve currently embeds around 25% probability of a cut today, which to us looks too conservative considering the ever-rising downside risks to the Canadian economy, especially after Trump hiked metal tariffs, which damage Canada more than any other country."

"We think this meeting is a coin toss. We are very marginally favouring a cut purely based on the economic justification, but admit that the BoC might send an excessively dovish signal by cutting when markets are pricing in only 5bp."

"Anyway, a hold may well be accompanied by dovish language, and the market's pricing for the July meeting (-16bp) and year-end (-38bp) both look too conservative to us. The Canadian dollar is one of our least favourite currencies at the moment, also considering the asymmetrical correlation with US economic woes compared to other G10 currencies."