CAD: NAFTA risks another reason for BoC caution – ING

Canada’s headline July CPI data came in line with expectations but the small uptick in the core inflation readings helped to marginally lift Bank of Canada (BoC) policy expectations, according to analysts at ING.

Key Quotes

“Our economists now see a strong chance of an October hike, although this is largely priced into the CAD.”

“The bigger debate is how many BoC hikes we get next year and whether Canadian 2-year yields can move any higher. We remain cautious as NAFTA renegotiation risks - and broader US political uncertainty - could see policymakers tread more cautiously. To offset these, we'd probably need to see another layer of positive macro news and here the focus will be on June retail sales (Tuesday) and trade data (Monday).”