BoC: Another surprise could temporarily boost the CAD - BNPP

The Bank of Canada (BoC) meets this week after it surprised markets by hiking rates in September, but subsequent comments expressing concern about the impact of currency gains have seen pricing for the October meeting fall to just under 25% chance of a hike, notes the analysis team at BNP Paribas.

Key Quotes

“If the Bank does deliver a third hike, we would expect USDCAD to test lower back towards 1.23. However, with Fed pricing also adjusting higher now, we would expect the pair to stabilize and recover, with markets likely to continue to price in a similar degree of tightening for the Fed and BoC over the next 18 months.”