USD/CAD drops a full cent on the Bank of Canada decision
If you read my preview before the Bank of Canada decision, I just couldn't see a scenario where there was a dovish hike.
There is no reference to removing the 'insurance' from the 2015 hikes. They've also taken a page out of the Fed playbook and brushed aside low inflation.
The question now: How many hikes are coming and when? If the BOC sees no more additional slack in the economy, that would argue for moving rates back to neutral, which is something like 2.00-3.00%. That argues for a much lower USD/CAD from here.
Forget the commentary from all the economists who were wrong on this. They're going to try to downplay what's happening here. This is a straight hawkish hike unless Poloz and Wilkins try to change it up at 1515 GMT in the press conference, but I just don't see that happening.
