Canada: Week ahead at a glance – TDS

Analysts at TD Securities point out that the Bank of Canada enters its blackout period on Wednesday, ensuring that Governor Poloz's comments at Jackson Hole were the final communication ahead of the September announcement barring a last-minute media appearance.

Key Quotes

“This will increase the focus around Thursday's release of Q2/June GDP, where TD is above the market looking for 3.5% q/q. SEPH employment (June) and factory prices (July) are released Thursday and Friday to round out the data calendar.”

“FX Market Outlook: The loonie has some critical event risk to chew on the next few weeks. Given the fact the market is holding out some hope of a Sep hike, the BoC narrative sits top of mind. While the market is closely centered on Oct, OIS rates are pricing in around a 15% chance of a hike at the next meeting.

Even so, we think Poloz's speech at Jackson Hole poured some cold water on the notion the Bank may shift this tightening cycle into overdrive. Indeed, the takeaway was that monpol normalization should remain gradual, suggesting that the risks of an upward spike in real rates are minimal.

For CAD, we also think the recent talking points of the BoC play into the "buy the rumour, sell the fact" trade on the loonie, which we believe is vulnerable to a recent runup on some of the key crosses over the past few weeks. That leaves us buyers of dips towards 1.2950 in USDCAD on any washouts in positioning.”