CAD: Questioning when the BoC will hike next? - ING

After another disappointing CPI release, odds of a Jan-2018 BoC rate hike have slipped slightly to 37% (versus 40% prior), notes the research team at ING.

Key Quotes

“We do note, however, it wasn't all bad news - with the core-common CPI reading picking up to 1.6% YoY. Still, a fairly benign inflation backdrop - with the second-round effects of a strong CAD also feeding through - is likely to keep the BoC on hold for the foreseeable future. A rate hike is more like now at the Apr-2018 meeting, though the fallout from a small dovish BoC re-pricing should be fairly limited for the CAD. Trade data (Tue) and retail sales figures (Thu) may offer further clarity here.”

“Our broader outlook expects USD/CAD to remain around 1.27 in the near-term amid conflicting external factors - namely higher oil prices being offset by NAFTA re-negotiation risks.”