Bank of Canada preview – on hold at 5%. Look to fade USD/CAD rallies.

<p>The Bank of Canada meet on Wednesday, 6 September 2023. The decision is due at 1400 GMT, which is 10 am Eastern time. The consensus is for the Bank of Canada to hold its key interest rate steady at 5.00%.
</p><p>Earlier previews:</p><ul><li><a href="https://www.forexlive.com/centralbank/bank-of-canada-preview-loonie-hits-five-month-low-ahead-of-rate-decision-whats-next-20230905/" target="_blank" rel="follow" data-article-link="true">Bank of Canada preview: Loonie hits five-month low ahead of rate decision. What's next</a></li><li><a href="https://www.forexlive.com/centralbank/bank-of-canada-preview-canadian-growth-shocker-confirms-pause-cad-forecast-20230904/" target="_blank" rel="follow" data-article-link="true">Bank of Canada preview – "Canadian growth shocker confirms … pause" – CAD forecast</a></li></ul><p>
Preview comments from CIBC:</p><ul><li>the downside surprise in GDP data will make it an easy decision for the Bank of Canada to leave
rates on hold, by even casting some doubts on the reasoning behind the July hike, given the strength in Q1
consumption that the BoC had cited for that move seems to have melted away in a hurry. </li><li>We don’t expect the
Bank to declare that rate hikes are done for good, let alone offer any hints about an easing ahead. Instead, the
emphasis will be on a judgement that the balance of risks make it reasonable to see how signs of a slowing
evolve ahead, but our view is that rates have in fact peaked for the cycle. </li><li>The jobs data could show some
hiring resumed in August, but remember that brisk population growth has raised the bar for what’s needed to
prevent a further uptick in the unemployment rate.</li></ul><p>and from TD:</p><ul><li>We look for the Bank of Canada to keep the overnight rate at 5.00% as slowing activity data and moderating labour markets allow the Bank to look past stronger CPI. </li><li>We do not expect any material change to the Bank's guidance as they will keep hikes on the table going forward.</li><li>We don’t expect the BoC to generate many fireworks. Most of the CAD interest will play through the crosses, where we are short GBPCAD. Still, we favour fading rallies in USDCAD</li></ul><p>1400 GMT is 1000 Eastern time </p>

This article was written by Eamonn Sheridan at www.forexlive.com.