From the FXWW Chatroom – Bank of Canada to hike 25bp tomorrow
• BoC likely to drop ‘gradual’ approach to raising rates and upgrade GDP growth forecasts
• Market leaning too dovish into BoC due to Friday’s poor retail sales & CPI
• Like long CAD bias vs AUD, MXN, USD into meeting
Market is placing too much emphasis on Friday’s weak retail sales & CPI print and is forgetting that after the September meeting BoC Deputy Gov Wilkins said the central bank debated dropping a gradual approach to rate hikes. Conditions are now ripe for them to drop this accommodative language. Friday data worries are overblown – the retail sales ex-autos print was only the first negative reading in 2018 while the three core CPI readings still average 2.0%.
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