Two meetings coming up on Wednesday
The Bank of Canada decision is Wednesday morning and the Federal Reserve is due that afternoon.
For the Bank of Canada, no change in the 1.75% overnight rate is virtually guaranteed with the market pricing a 98.9% chance of no move. Given market pricing, it might be an extended period on the sidelines for Poloz, with only a 27.5% chance of a cut priced in until October 2020.
The likelihood of a Fed cut means US rates will fall below the BOC. The market sees a 92% chance the FOMC lowers rates to 1.50-1.75% Wednesday. More important for the market will be signals about the December 11 meeting. The odds of another cut then have been falling and are now down to 22%; but that rises to 42% for the Jan 29 meeting.
If rate hikes are slowly priced out, it will put steady upward pressure on Treasury yields and the dollar -- especially against the yen.
