Pricing BoC Caution
The Bank of Canada is one of several central banks looking to sign off on policy for the year this week. Looking back through 2013, especially the last six months, Ottawa’s decisions have just been as surprising as their counterparts elsewhere, and probably deserves more credit for their success in turning around and anchoring market expectations for policy. Nonetheless, doubts remain over whether their caution is warranted, especially with a robust Q3 GDP print of 2.7%y/y, the best (seasonally adjusted) out of he eight G10 economies already reported. On a tactical level, the lack of pricing for positive data surprises and positioning overhang point to upside risks for CAD heading into the decision.
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