Analysts at Nomura explained that this week’s BOC meeting saw CAD rally after the Bank of Canada removed “cautious” from the monetary policy statement.

Key Quotes:

“This week’s BOC meeting saw CAD rally after the Bank of Canada removed “cautious” suggesting a slightly less data-dependent approach to policy normalisation and tipping the market towards a July hike. This should lead the market to price in a July hike with more conviction. Further, clarification of the reasoning behind the change will likely come from BOC officials ahead of the July meeting, which could provide further hawkish surprises. Tactically, we see opportunities for CAD longs against other commodity currencies into the July BOC meeting.”

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