BOC decision will be announced at 1500GMT
- Consensus is for an on hold decision (cash rate 1.75%)
Preview via TD (in brief):
- We expect the BoC will leave the overnight rate unchanged
- communique should be fairly short
- while the Bank will note that weaker commodity prices present a headwind to the outlook, we expect that they will again warn that higher interest rates will be needed
- The biggest question mark will be around the Bank's treatment of the energy shock. Lower oil prices will materially suppress Q4 growth, and even if the impact is expected to be transitory markets will be looking for reassurance that a January rate hike is still a realistic possibility. If the Governor sounds overly concerned about falling oil prices, there is a risk that rates markets could rally sharply
TD on the expected CAD response:
- A cautious BoC should reaffirm CAD weakness on the crosses
- critical point is that CAD functions as a risk asset these days - not just a monpol play
