Canada: Stronger wage growth to bring back Captain Hawk - TDS

Along with a nearly universal consensus, analysts at TDS expect the Bank of Canada to leave rates unchanged this week.

Key Quotes

“More importantly, we expect the Bank to talk up the pickup in wage growth after latest stellar jobs report.”

“The debt overhang remains a major hurdle for the Bank to hike more than twice in 2018. We expect CAD policy rates to remain below US levels and a slower pace of tightening.”

“Rates: With the January FAD still priced at less than 50/50, a constructive tone at this week’s FAD will reinforce the postLFS move higher in front-end rates and accompanying flattening trend. Tactically we like selling Canada versus the US in the belly, and we will take a fresh look at steepeners following the BoC meeting.”

“FX: Renewed optimism towards a January BoC rate hike together with the pickup in some crucial data releases, should offer CAD some fresh tailwinds into early next year. We maintain our short USDCAD call and in the short-run look for push below 1.24.”