There are cautious dovish bets for the BOC in 2020 with odds of a 25bp rate cut by October at roughly 50 percent. These are more dovish than from New Zealand but less so than out of Australia. Canada’s economy was rocked by November’s jobs report and if the disappointing trend in data surprises prolongs, we may see the central bank ease. However, Prime Minister Justin Trudeau’s middle-class tax cuts could undermine the urgency of monetary stimulus. BOC Governor Stephen Poloz highlighted the potency of fiscal support in an era of low interest rates. If he steps aside, CAD’s yield advantage in AUD/CAD and NZD/CAD could prove fruitful.


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