USDCAD and BOC Rate Hike Outlook for June

I'm looking at $USDCAD and the Bank of Canada's next rate decision. With $USDCAD trading around 1.40883, near the top of its daily range, the market seems to be pricing in some further USD strength, or CAD weakness, which implies a less aggressive BOC.

My take is that the probability of the BOC hiking rates in June is significantly underestimated right now. We've seen decent employment figures recently, and while inflation has cooled, it's still sticky in areas. The market seems too comfortable with the pause narrative. I'd put the odds of a 25bps hike in June at around 40-45%. My reasoning is that the BOC, like other central banks, is likely to err on the side of caution with inflation, even if it means some short-term pain for the economy. They won't want to get caught behind the curve again. If they do hike, we'd see a pretty swift move lower in $USDCAD, likely testing the 1.39 handle shortly after the announcement. If they hold, this level around 1.41 will probably hold as support.