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TD BoC Call Change: Looking For Back-To-Back Hikes

CANADA
  • Ahead of next week's meeting, TD now expect the BoC to hike 25bps in both June and July as “ongoing economic resilience will lengthen the path back to 2.0% inflation”.
  • “1) Recent data have cleared the bar to additional hikes, 2) A one-and-done hike would accomplish little, and 3) Market pricing [or around 30bp of hikes by Sept] is a bit conservative. Pulling those threads together, we look for the Bank to lift the overnight rate by 25bp in both June and July.”
  • They see their new call reinforcing the push lower in USDCAD. They had been forecasting a push toward 1.30 this year with a retest of that level in H2, but now possibly sped up.

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