Core inflation picked up at the end of last year which should make the BoC reluctant to discuss rate cuts as at today’s policy meeting. If that proves to be the case it could disappoint market expectations for earlier BoC cuts and encourage a stronger Canadian Dollar. 

However, we expect any upside for the CAD to be only modest. Any gains for the Loonie could be tempered if there are discussions by the BoC about scaling back quantitative tightening.