Mitsubishi UFJ Financial Group analyst Derek Halpenny said in a note that even
if the Bank of Canada follows Governor Macklem’s signals and raises rates, the
Canadian dollar’s upside is likely limited. Markets assign a 76% probability to
a 25bp hike, so a move could still surprise traders, but Halpenny said Macklem’s
signaling is unlikely to convince markets of a sustained tightening cycle;
pricing implies roughly 100bp of cumulative hikes by next September. He added
market participants will stay cautious ahead of the Federal Reserve’s rate
decision.
