FX Strategy
We expect the Bank of Canada to key policy rates on hold and 0.5% at its meeting on Wednesday. In the absence of a monetary policy report (MPR) or press conference, the tone of the statement will be a key determinant of the market reaction.. With the data since the October MPR largely in line or a bit better than expected, the Bank of Canada will likely maintain its assessment that risks around the inflation outlook are ""roughly balanced". Additionally, the overall tone is still likely to be one of cautious optimism even as governor Poloz noted that uncertainty remains extremely high in recent comments. Overall the statement will suggest – as Poloz did in comments this week – that absent a material shock to their inflation outlook the bar for a cut remains relatively high.