BoC: Dovish hike likely but don’t rule out a surprise hold - ING

Markets now see a 25bp BoC rate hike (Wed) as a formality after the latest jobs data (which came in at +45.3k), according to the analysis team at ING.

Key Quotes

“Still, the CAD OIS curve pricing in close to ~100bp worth of tightening over a 2Y horizon looks a bit extreme at this stage; if anything, we see risks of a dovish hike - with any forward guidance signalling a very shallow hiking cycle. This would be mildly CAD negative.”

“We wouldn't fully rule out a surprise Poloz hold given the lack of core inflationary pressures. Risk-reward favours $/CAD upside.”