USD/CAD: Loonie to benefit short-term if the BoC hikes by 75 bps – Commerzbank

The market is likely to keep a close eye on the rate decision as well as the Bank of Canada’s projections in its new monetary policy report. The loonie could enjoy some gains in the short-term if the BoC delivers a 75 basis points hike as expected, economists at Commerzbank report.

If the BoC only hikes by 50 bps, the loonie is set to lose further ground

“We expect that CAD will be able to benefit short-term if the BoC hikes its key rate by 75 bps with the market considering its statement to be hawkish. Increasing fears of a recession might constitute a fly in the ointment though, which would reduce possible gains.”

“If the BoC does not meet expectations today and only hikes the key rate by 50 bps the loonie is likely to lose further ground against the USD. Downside pressure on USD/CAD would increase further if the BoC then also issued a dovish statement.”

See – BoC Preview: Forecasts from 10 major banks, taking what is offered, a 75 bps hike