FXStreet (Edinburgh) – According to strategists at TD Securities, the Bank of Canada could refrain from acting at its October meeting.
Key Quotes
“The Bank of Canada‘s Business Outlook Survey (BOS) will provide an important qualitative assessment of two of the key themes at the core of the outlook”.
“The first is investment intentions, where following the latest push lower in the price of oil, firms in the energy sector are likely to further pare back future spending. A recent speech by Governor Poloz hinted that this was likely”.
“The second theme is the degree of optimism among manufacturing firms that stand to benefit from both the lower Canadian dollar and a firming (though patchy and vulnerable) global outlook”.
“At face value a forecasted widening in the August trade deficit (released on Tuesday) will challenge this narrative, but we anticipate firmer export volumes that will ultimately support real GDP growth through Q3”.
The BOS is an important tool into the Bank’s decision making process and the overarching theme of caution will curtail how upbeat future communications can be”.
“But in the spirit of buying time amid elevated uncertainty, and with a low bar to beat for forecasted Q3 growth, our expectation is for the overnight rate to be left unchanged for the balance of the year and into 2016”.
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