The Canadian dollar is holding steady at near 2.5 year highs as we wait to hear from the Bank of Canada tomorrow. No one expects a rate change but the language of the release will be watched closely. There will not be a Monetary Policy Report released this time which means there will be less for the market to decipher. Nonetheless, it will be interesting to see if and how the Bank addresses the Loonie’s recent strength against our largest trading partner. We do not expect the Bank to try to lean into the exchange rate directly but any change in tone when referencing it could move the market. Global events continue to be the dominant factor driving the Canadian dollar and in particular news around vaccines will be scrutinized for how quickly the pandemic might end.
