After a long pause the BoC in June hiked again and market pricing implies a 75% probability of another hike today. We remain unconvinced of the need to move. Yes, the jobs market was strong (59.9K increase in employment vs 20K expected) but wage inflation was weak with the hourly wage YoY rate falling from 5.1% to 3.9%. Does the BoC need to hike with the core Median YoY CPI rate down at 3.9% with further tightening still to feed into the real economy? 

Any benefit today for CAD from a rate hike is unlikely to be sustained over the medium term. 

We now forecast little change in USD/CAD through to year-end even as the Dollar weakens across G10 and then see USD/CAD higher in 2024 as economic weakness is more pronounced in Canada than elsewhere.