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BoC Hike Doesn't Stop GoC Rally With Press Conference Imminent

CANADA
  • Heading towards the BoC presser, a 25bp hike and strong language hasn’t been enough to prevent a further drifting lower in GoC yields, with 2YY 2bps lower than just before the announcement for -13bps on the day.
  • Whilst possibly disappointment that there wasn’t a clearer forward bias, BAX rates suggest it comes with a pulling forward of hikes, with the front Sep’23 implied yield +5bp but 2024 contracts building on the CPI-induced rally (Jun’24 -7bp on the day, Dec’24 -12bp).
  • USDCAD has pushed 40 pips lower since the decision with a low of 1.3144 but with CAD continuing to see sizeable underperformance of other peers post CPI. Support seen at the bear trigger of 1.3117 (Jun 27 low)

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