5 March 2018

Such a decision will change the BoC’s pace with its three rate hikes during five previous meetings, pushed by strong economic growth and job market.

“We can see a too aggressive market these days,” – Basdeo noted. “This reaction is connected to what may happen in the U.S., which is the fiscal impulse leading to strong growth there and us benefitting from it here.”

Canadian market participants for bankers’ acceptance contracts believe the BoC will raise its rate by 0.56% by the end of the year. Now the odds of a hike on April 18 are almost 38%, while it was 70% before the release of weak economic data and federal budget keeping the fiscal deficit.

Another issue is the current North American Free Trade Agreement negotiations with their seventh round ending next Monday. It will remain a possible source of volatility for the Canadian dollar. After President Donald Trump announced duties on steel and aluminum March 1, the loonie had its worst week in a year. Moreover, the news came amid Prime Minister Justin Trudeau’s suggestion that Ottawa wants to leave NAFTA.