Broader US Dollar (USD) strength explains the modest drop in the Canadian Dollar (CAD) on the session so far. The BoC policy decision today is expected to result in a 25bps rate cut which is already largely factored in.
Broader US Dollar strength explains the modest drop in the Canadian Dollar on the session so far. The BoC policy decision today is expected to result in a 25bps rate cut which is already largely factored in. Swaps have been effectively discounting a January ease for some time, with the strength of some recent data releases only marginally affecting pricing, Scotiabank's Chief FX Strategist Shaun Osborne notes.
The Bank will provide more detail on its analysis of the impact of tariffs on the domestic economy today and, given the uncertainty around the outlook, it may signal that the pace of easing will slow in the coming months. Significant tariffs applied broadly to Canadian exports would prompt a severe slowing in domestic growth. US tariffs and retaliation on US goods coming into Canada would slow growth and boost inflation, tilting risks towards rate hikes.
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