According to Christian Lawrence, senior FX strategist at Rabobank, the Bank (BoC) had already shifted to the dovish side but the tone of the accompanying statement was a little more optimistic than the April meeting.
"We have been at pains to stress that the slowdown will continue with households being squeezed and investment and trade likely to remain lacklustre."
"The Bank of Canada still has hope and we still think this is false hope. Indeed, what the Bank sees as temporary, we see as more structural."
"We expect a 25bp cut at the April 2020 meeting and this is now fully priced in by the market. In terms of USD/CAD, a confirmed close above 1.35 opens up a test of the six-month 1.366 high but we tend to think 1.35 will hold for now."
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