Bank of Canada meets January 17
The BOC meeting on January 17 is going to be interesting. The BOC has urged 'caution' in its statement but the BOC Governor Poloz decided to redefine 'caution' and said they could hike anyway.
Now, the market is saying a hike is coming. The OIS market is pricing in a 69% chance of a hike, up from 45% before today's sizzling jobs report.
A hike would boost Canadian rates to 1.00% and send the Canadian dollar down near 1.20.
The problem there is that trade could begin to suffer due to the stronger loonie. That might be offset by higher commodity prices but manufacturers might struggle. Many of them are also dealing with NAFTA uncertainty as well.
In all, about 70% sounds right for now.
