The BoC is wobbling over its previous role as the only major central bank to not have an explicitly dovish bias. The October rate meeting revealed a not of caution from the bank as they expressed risks are to the downside with ongoing US-China trade tensions, weakening business investment and falling oil prices.
The dovish shift has led to a 25% probability of a December rate cut. The elements to watch out for are:
- Dovish domestic CAD data
- Falls in the oil market, likely prompted by anynegative news on theUS-China trade talks.
Either one has the potential to weigh on CAD further from here and if the US-China trade talks fail at any point then USDCAD longs would be attractive on any USD safe haven bids.