There is little prospect of a swift pivot from the Bank of Canada (BoC) at the 7 September meeting. Economists at HSBC expect the USD/CAD pair to see modest gains ahead.

CAD to outperform other “risk on” currencies in the short-term

“The market is appropriately priced for a debate between 50 bps and 75 bps at BoC’s September meeting. The decision may dictate the knee-jerk reaction, but the hawkish tone of delivery should allow the CAD to outperform other ‘risk on’ currencies in the short-term, but not enough to outpace the USD, not least because the USD will be supported by the tailwind of risk aversion.” 

“While USD/CAD may grind higher, we do not look for new ground to be explored.”