As for today’s BoC decision, economists at Credit Suisse think markets can react to any signs of complacency in forward guidance by pushing USD/CAD to test the October highs close to 1.4000.

Forward guidance holds the key for the USD/CAD

“A lack of acknowledgment by the BoC today of the improved employment numbers or any sign of complacency, in general, could very rapidly lead to an acceleration higher in USD/CAD through 1.3800.” 

“Conversely, evidence that the BoC is increasingly alert to the possibility that it might need to hike rates further would be seen as validating current market expectations and would likely result in more benign price action, with USD/CAD reversing part of yesterday’s spike.”

“We remain ready to anticipate further USD/CAD gains towards 1.4000 if the BoC were instead to embrace a more explicitly divergent policy stance vs the Fed.” 

See – BoC Preview: Forecasts from seven major banks, leaving rates on hold