I'm leaning towards the Bank of Canada maintaining a hawkish stance through their June meeting, making a rate cut unlikely despite recent inflation prints. There's a roughly 65% chance they'll signal continued vigilance, keeping $USDCAD above 1.40 for the next few weeks. The market seems to be pricing in some cuts too quickly, given current economic data.
I'm not so sure. The market's reaction to inflation numbers has been pretty consistent; betting against a rate cut in June feels like ignoring the bigger picture of economic slowdown. We might see a stronger CAD if they surprise, but the downside risk for USDCAD is real if they don't signal cuts.
That's an interesting take. I'm still trying to get a feel for how much the recent inflation slowdown will impact their decision. Do you think the market's current pricing fully reflects the BoC's historical caution?
I'd be careful relying on a 65% chance for BoC to maintain hawkishness. Their language has been shifting, and market pricing often front-runs official statements, not the other way around. Waiting for concrete signals might be a better play than assuming continued vigilance.