The key to what happens next is likely to be what the BoC makes of the inflation numbers. Given its rather cautious approach in recent months and the fact that we have now seen real progress in inflation for the first time, I honestly cannot imagine that it will announce any imminent rate cuts at today's meeting. Especially not at a meeting where no new projections will be released.

Therefore, I would expect the BoC to reiterate today that it wants to wait a while longer and thus push back expectations of a rate cut. If it does not do so, the CAD is likely to come under even more pressure. Given the very hawkish BoC last year, however, this is not our base case.