CAD: Non-Trivial Risk BoC Adds Yield Curve Control To Its Policy Arsenal On Wed – TD

October 28, 2020 Off By admin-445

The Bank of Canada holds its policy meeting later today. What can we expect from the central bank?
Here is their view, courtesy of eFXdata:
TD Research discusses its expectations for the BoC October policy meeting on Wednesday.
“We expect the overnight rate to remain unchanged at 0.25% with no substantive change to the Bank’s forward guidance, but the October MPR will be an important demarcation point as the Bank sets out its path for 2021 and beyond,” TD notes.
We do see a non-trivial risk that the BOC adds yield curve control to its policy arsenal. While the CAD has not been that responsive to anything other than broad USD variation and risk sentiment, we do track a small overvaluation and long build on our FV and positioning models. So in the off chance FX markets and the CAD are looking for something to do ahead of the US election, we think the CAD might have some ground to give up on the non-trivial risk of a YCC adoption,” TD adds.
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