Bank of Canada’s meeting

The Bank of Canada will announce its interest rate decision at 17:00 MT time on September 6. Canadian central bank raised its benchmark interest rate by 25 basis points from 0.50% to 0.75% at July meeting. Such step was followed by a significant increase in Canadian dollar’s exchange rate. Canadian economy seems in a good shape and there’s a high possibility of another rate hike by the year-end. At the same time, risks may come from Canada’s neighbor, the United States, as well as the elevated debt of Canadian households.

The most likely scenario is that Canadian regulator will choose a “wait-and-see” approach and stay on hold in September. Still, if the Bank of Canada raises the rate or gives hawkish comments, there may be a positive reaction in the CAD. If the regulator sounds cautious, Canadian currency will suffer a selloff.

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