The BOC's Business Outlook survey is tomorrow
The Bank of Canada puts a lot of faith in its quarter survey of businesses. Policymakers frequently and increasingly reference it when they set policy. The most-recent survey set the stage for the hawkish shift that's taken place in the past few months. The latest version is due tomorrow but Poloz undoubtedly already knows what's in it.
He will have to balance that against the latest datam which has been poor. Retail sales missed estimates last week and CPI was far-below target. Poloz might also have a hint at Friday's jobs report, which is also going to be a major factor in the July decision.
Right now, the market is pricing in a 60.8% chance of a hike but that will be highly volatile based on his comments. Especially watch for any changes in the forward guidance from the May BOC statement, which read:
"Overall, developments since April further reinforce Governing Council's view that higher interest rates will be warranted to keep inflation near target. Governing Council will take a gradual approach to policy adjustments, guided by incoming data. In particular, the Bank will continue to assess the economy's sensitivity to interest rate movements and the evolution of economic capacity."
On net, this is a very tough one to handicap but I think the inclination in the market will be to sell USD/CAD after the decision because of the rise in oil. With that, I think it's probably best to be short USD/CAD into the headlines while hoping for a reiteration of the hawkish stance.
Watch it live here:
