The next big central bank decision is from the Bank of Canada at 10 am ET on Wednesday. The economist consensus is for a 50 bps hike but the market is putting just a 27% likelihood on that with the remainder at 25 bps. That will put the BOC at 4.00% or 4.25%, with the latter seen as the top for now.
“The announcement feels exceptionally uncertain, a fitting end to a year that has been full of surprises,” Andrew Kelvin, TD chief Canada strategist, wrote in a note.
CIBC argues that it doesn’t really matter whether the Bank of Canada does 50 bps now and calls a halt to hikes or does 25 bps now and 25 bps in January then pauses. The real question is whether the terminal top and there’s some certainty around that.
CAD is trading at the lowest since Nov 3 ahead of the decision, largely due to oil and natural gas price declines.