USD/CAD to see little upside on unchanged BoC – MUFG

Today's Bank of Canada meeting coming just before the general election on 20 September is unlikely to shock or surprise in terms of dramatic changes in tone or guidance. Therefore, economists at MUFG do not expect the USD/CAD pair to head higher from here. 

See – BoC Preview: Forecasts from eight major banks, no policy change expected

Bank of Canada to stand pat

“While the BoC will inevitably acknowledge the economic slowdown, we suspect the guidance will be maintained with the additional information between now and the October meeting (MPR meeting) being used to justify any meaningful change in guidance by then.”

“USD/CAD did bounce notably yesterday and momentum therefore over the very short-term could be to the upside. However, USD/CAD has advanced from close to the 1.2000 level since June so we believe a lot of the bad news related to the slowdown and the COVID-19 pick-up and the election uncertainty is well priced now.” 

“Assuming there is no change in guidance today, we doubt the upside from here will prove notable or sustained.”