Scotia Bank write that CAD risk is....>

DOLLAR-CANADA: Scotia Bank write that CAD risk is elevated as markets head into

Wednesday's Bank of Canada rate decision.

The bank consider three possible scenarios: a hawkish hike, a neutral hike or a

dovish hike - and view the latter two as the more likely, given that

policymakers may not remove the 'gradual approach' language in the final

paragraph of the statement.

A neutral tone would balance stronger domestic growth and sentiment figures

against the negatives identified above, while a dovish hike would likely see

greater attention paid to global risks and recent financial market turbulence.

Scotia write that the current technical set up for the CAD is challenging as the

currency hovers just above the lower bound of a multi-month ascending trend

channel (USDCAD descending channel). A break of the channel would open up the

risk of a bear flag for the CAD (bull flag for USDCAD) and suggest a retest of

the 1.33/1.34 area at least in the next few weeks.