Lots of talk the BOC will damper optimism because of hot currency
The Bank of Canada decision is due at the top of the hour and a major line of thinking in numerous research notes is that Poloz will use more cautious language because he doesn't want to see the Canadian dollar rally further.
I doubt it.
The BOC is consistently the central bank that jawbones the least. Time and time again, they brush off questions about the currency and I don't believe the adjust rhetoric based on FX moves.
I think there's a good chance the BOC is more upbeat than the market expects. Does that mean it's time to buy the Canadian dollar? That's a tougher call because it's rallies so far, so fast.
At this point, it's better to trade the headlines. Focus on when the BOC says the output gap will close. The current rhetoric is that it's 'around the end of 2017'. If it's shifted to something like 'around the middle of 2017' then CAD will rally (ie USD/CAD down).
For more on the decision, check out my preview.
Note that the decision will be followed by a press conference 75 minutes later at 11:15 am ET (1515 GMT).
