Recent economic data has been mixed, with better jobs data but a big surprise move lower in inflation last week.
It is unlikely that the BoC will make any material changes to their guidance today.
The most likely outcome is a statement that is largely unchanged from the prior.
A surprise would be if they put another hike firmly on the table (Hawkish), or alternatively if they start talking about cuts (dovish).
If the bank leaves their statement largely unchanged, that could potentially open up some upside opportunities in the AUDCAD pair.
Analysis
The BoC is in a difficult position. On the one hand, inflation is still high and the labor market is strong. This suggests that the BoC needs to continue raising rates in order to bring inflation under control.
On the other hand, the global economy is slowing down and there is a risk of a recession. If the BoC raises rates too aggressively, it could tip the economy into recession.
The BoC is likely to take a cautious approach today and leave its statement largely unchanged. This would suggest that the BoC is still committed to raising rates, but that it is also aware of the risks to the economy.
If the BoC leaves its statement largely unchanged, it could be positive for the AUDCAD pair. The AUD has already been boosted by today’s CPI data beat, and a dovish BoC could send the currency even higher.
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