5bpts of BoC tightening over the next 12 months? - Scotiabank

Analysts at Scotiabank explained that has been testing fresh multi-week lows with a full retracement of the post-Fed rally from mid-March. 

Key Quotes:

"The broader tone is delivering modest pressure however the domestic outlook remains dominant into next week’s BoC policy decision and MPR update with no material change in the balance of risk following Monday’s BoC Business Outlook Survey and its mention of ‘slack’, ‘material excess capacity’ and ‘slow growth’."

"OIS are still pricing 5bpts of BoC tightening over the next 12 months and we continue to highlight the risk of CAD weakness on the basis of a potential extension to the anticipated closing of the output gap (last seen at mid-2018 in the January MPR). We remain bearish CAD."