USD/CAD: Cannot exclude a July BoC cut – ING

The
latest
hiring
contraction
and
rise
in
unemployment
to
6.2%
in
Canada
has
put
a
July
Bank
of
Canada
rate
cut
on
the
table,
ING’s
FX
analyst
Francesco
Pesole
notes.

CAD
to
continue
to
underperform

“Our
latest
forecast
saw
Bank
of
Canada
cuts
in
September,
October
and
December.
But
the
latest
hiring
contraction
and
rise
in
unemployment
to
6.2%
has
put
a
July
cut
on
the
table.”

“Markets
are
pricing
in
16bp
of
easing
for
July:
we
think
the
deciding
factor
will
be
the
June
inflation
report
on
16
July,
after
May’s
figures
came
in
a
bit
higher
than
expected.”

“Still,
market
pricing
for
total
BoC
easing
in
2024
looks
conservative:
55bp
versus
our
call
for
75bp.
There
is
therefore
ample
room
for
dovish
repricing
along
the
way.
We
think
CAD
will
continue
to
underperform
other
commodity
currencies
due
the
domestic
story
and
its
lower
sensitivity
to
a
decline
in
USD
rates.”