CAD is firmer ahead of the Bank of Canada (BoC) Interest Rate Decision. Economists at Scotiabank expect a hike to propel the Loonie.

Narrower spreads suggest CAD upside risk

We expect a 25 bps hike in the Overnight Target rate from the current 4.50%.

A somewhat hawkish hike (the policy statement is unlikely to shut the door definitively on more tightening) should put the CAD on course for the mid/low 1.33s at least. 

Narrower, short-term US/Canada cash bond spreads already suggest some unrealized downside potential in USD/CAD which tighter BoC policy today may help achieve