Richard Franulovich, the head of FX strategy at Westpac, believes the BoC next week should fall into line with the dovish signaling from G10 peers and prepare the ground for at least one rate cut before the year is out, amid rising international trade risks.

• “The BoC’s statement likely signals a preparedness to provide accommodation though falls short of an ironclad explicit commitment.
• Rates markets price in 18bp of a BoC cut at the BoC’s Oct 30 meeting and 25bp by the Dec 4 decision. A dovish tone next week likely sees markets embrace a full cut by their Oct 30 meeting even as the bank reiterates an upbeat message on domestic growth momentum.
• USD/CAD likely to firm toward 1.36-1.38 into Q4 though maintains a persistent bid tone against its dollar bloc cousins.”